Given the enormous runs of sometimes more than 100% in search and directory
stocks the past few weeks, it brought to light that the number two Web
site, Netscape.com, ought to be worth more than an Infoseek, which climbed
its way past the $1 billion mark.
While Netscape’s Web site isn’t a standalone business, we believe its value
exists more and more as a growth vehicle for the Internet software pioneer
whose name is synonymous with the Internet. Given the 50%-plus market share
for its browser and the tremendous built-in leverage for the brand–and
relative to the search stocks that all broke the $1 billion threshold on
market capitalization–led us to re-evaluate Netscape as more than a
software company being steamrollered by Microsoft.
The potential downside is that if Netscape’s browser share dwindles then
that automatic feeding via the browser of Netscape.com may cause users to
fall off also. That’s why it’s extremely critical that Netscape execute its
Web media strategy flawlessly.
Netscape derives a portion of its revenue from selling search slots on its
site, something that we think could erode its user base over time. Every
time a search is done, that user is taken to the search engine/directory
Web site–that means away from Netscape.com’s NetCenter.
It’s like going to McDonalds and them having an ejection seat that launches
you to Burger King. That’s one reason why Microsoft licensed its own search
engine–unclutter the page and keep users in its own site.
On April 22, Netscape announced it will add free e-mail for its users
through a deal with USA.NET. That adds stickiness to Netscape but there’s a
product called ‘EMURL’ that lets any Web site add this feature. Adding free
e-mail is the knee jerk of the week for these Web sites.
Mecklermedia’s WebSite Value Index
WEBSITE | March | April 22 | April 8 | April 22 | Percent |
VALUE | Unique | Market cap | Value | Value | change |
INDEX | Users | or est. PMV * | Per | Per | April 8 – |
(sorted by March users) | (millions) | (millions) | User | User | April 22 |
Yahoo | 32.5 | $ 5,425 | $ 137.25 | $ 167.06 | 22% |
Netscape.com* | 23.4 | $ 1,400 | $ 27.77 | $ 59.82 | 115% |
Excite | 19.3 | $ 1,447 | $ 44.08 | $ 74.84 | 70% |
Microsoft.com* | 18.0 | $ 1,750 | $ 69.38 | $ 97.13 | 40% |
AOL.com* | 17.7 | $ 1,500 | $ 67.66 | $ 84.57 | 25% |
Lycos-Tripod | 15.1 | $ 963 | $ 59.92 | $ 63.65 | 6% |
GeoCities* | 14.4 | $ 300 | $ 18.04 | $ 20.81 | 15% |
MSN.com/Hotmail | 14.4 | $ 800 | $ 50.29 | $ 55.49 | 10% |
Infoseek-WBS | 16.2 | $ 1,008 | $ 38.81 | $ 62.22 | 60% |
AltaVista* | 7.5 | $ 275 | $ 28.07 | $ 36.76 | 31% |
TOTAL | $ | $ | $ | $ | 33% |
AVERAGE | $ | $ | $ | $ | 33% |
*PMV = private market value, what an asset
or firm may
fetch at private auction among bidders (c) 1998 Mecklermedia. Users:
Relevant Knowledge;
WebSite Value Index is a Mecklermedia property
With most of these sites playing copy cat, merging into the same space as
the one-stop be all for everyone, getting to be 10 flavors of vanilla here
and zero innovation. That’s likely a result of market caps north of $1
billion. Is rigidity setting in?
Remember CompuServe and Prodigy? Both were number one in online services at
various points in time with millions of users. Unbeatable by many accounts.
Yet as soon as they thought they ‘made it’ they started losing it. There’s
some important lessons there for today’s top 10 Web sites. Netscape’s
roller coaster ride on Wall Street provides ample evidence of that.