the market leader seems to be the trend with the rise in this week’s
WEBDEX, Web site user value index, as Yahoo (NASDAQ:YHOO), AOL.com
(NYSE:AOL), Microsoft (NASDAQ:MSFT) find more than a 10% gain since
December 16. Fueling the rise are new all-time highs for more than a
handful of these stocks.
At $959 per user Yahoo! leads the pack by a wide
margin, as it has all year. We expect AOL.com — valued separately from AOL
in our analysis here — to rise in value as 1999 draws upon us and AOL
shifts its strategy more to embrace the Web as part of the “AOL
Market cap or PMV*
Market cap or PMV*
AVG. without Yahoo
) 1998 internet.com *PMV=estimated private market value for Website only;
users, media metrix
With its pending $4.2 billion acquisition of Netscape (NASDAQ:NSCP), AOL
could prove to be by far the most dominating force on the Internet with its
AOL.com property if it can mesh the properties and user experiences into
revenue and earnings growth.
If so, we could see a combined
AOL.com-Netscape.com valuation that exceeds $10 billion rather quickly, and
that’s just holding the pro forma entity at the WEBDEX average.
the benefit in this case is that we think 1+1=3, that the synergy of
>AOL.com and Netscape.com provides compelling e-commerce and marketing
opportunities — all hinging on the observation that together they appear
to be the #1 Web site(s) in overall user and audience reach.
Netscape.com puts AOL way over the top in that regard in a lead that may
force Yahoo to go out and buy big traffic unlike anything it’s done so far.
Lycos (NASDAQ:LCOS) has been a buyer all year, turning itself into a
network of Web properties that gives it a reach of 45% according to Media
Metrix, just 3 points behind Yahoo’s sites. Excite sits at 30% Web reach
and Infoseek, 20%.
Speaking of Infoseek, as we mentioned the $50 options
Disney has to exercise its warrants, it has three years to do so and those
options are just that–options.
Disney may never exercise them and SEEK
may be better off if it doesn’t. Although if Go.com becomes successful then
investors will have a way to invest in DisneySeek through SEEK. We await
signs of Disney’s legendary marketing muscle that has yet to be flexed
Compaq’s (NYSE:APQ) AltaVista search engine loses some luster again
in our view since the search space is crowded and AltaVista is in need of
some marketing muscle of its own amid the Compaq machine. Side note: and
maybe Compaq would perhaps do better making sure its PCs work–since the
one we just bought doesn’t print (perhaps we should have bought a DELL or
This week we’re also slicing the WEBDEX analysis to bring you
a comparison of how each in the top 10 compares to the average in its value
per user. Some interesting numbers pop up that show the relative disparity
in how each firm is valued on a per user basis. All users are not created
equal but some are more equal than others:
Firms compared to
of avg. value
Through December 21, Steve Harmon’s top 10 Internet
stocks to watch in 1998 were up 350%…for 1999 Steve Harmon’s Hot Stock
Watch will be available as a monthly e-newsletter. It will feature analysis
on the Hot Stocks, with a heads up about new movers who could do some
shaking on Wall Street — interested? put “HotWatch” in subject header and
e-mail us now —yes, tell me more
about Steve Harmon’s HotWatch ’99