Hubs Report Reduced Q2 Traffic Growth
By Steven Vonder Haar, ZDNet
The summer blahs are hitting the World Wide Web's navigation hubs harder than ever.
Traffic at the Internet's leading portals is taking its customary seasonal swoon as more users abandon their PCs in favor of outdoor activities, with some sites posting their most sluggish quarter-over-quarter growth rates ever.
It all leaves some industry analysts questioning whether the slowdown stems from seasonality or more from fundamental changes that foreshadow slow growth in coming months.
"There could be so many different trends taking place here that it's hard to read the market," said Brian Oakes, an analyst at the Lehman Bros. investment banking firm. "But the implication is that there may be no new killer application out there to drive usage higher."
Seasonality is nothing new in the online business. In 1997, each of the four leading navigation hubs - Excite Inc., Infoseek Corp., Lycos Inc. and Yahoo! Inc. - posted its slowest growth rates during the second quarter.
"We all have a summer slowdown," said David Sze, vice president of network programming and content at Excite, which saw second-quarter growth drop to 10 percent from a first-quarter rate of 47 percent. "It's consistent with the cyclical nature of the industry."
But at Yahoo! and Infoseek, second-quarter traffic growth this year fell below even the low ebb in growth a year ago. After a first quarter in which it posted traffic growth of 46 percent, Yahoo!'s growth rate tumbled to 21 percent during the second quarter. That's below the 27 percent quarter-over-quarter growth rate logged during 1997's second quarter.
Infoseek's traffic was flat in its most recent quarter compared with the first three months of the year, excluding the impact of scaling back its marketing partnership with Netscape Communications Corp. Taking the loss of Netscape traffic into account, Infoseek traffic dropped 8.1 percent during the quarter.
But Infoseek Chief Financial Officer Les Wright said industry watchers should be wary of reading too much into quarterly traffic results.
"What we're focused on is getting our share of the next 50 million viewers to come on the Internet," he said. "I don't think the Web has reached a saturation point, as the Chicken Littles in the market would lead you to believe."
If it becomes apparent later this year, however, that outside factors such as the proliferation of competing portals are slowing the growth rates of the navigation hubs, investors likely will react negatively, said Patrick Keane, an analyst at Jupiter Communications LLC.
"In this market, you can't use revenues or profits as a measure of success," Keane said. "You have to use traffic as the metric. And if Wall Street sees that traffic isn't increasing in the fall, it could get ugly." |
