Harmons read on LOOK.. I think hes saying its worth like $40/share comapring it to the others like INSP with a value half those of GOTO/ASKJ/YHOO etc..
Conventional wisdom says that the search and guide space was long over as far as new stocks, that Yahoo, Lycos, Excite, and Infoseek had soaked up Wall Street's thirst for portals eons ago. Along comes 1999 and 3 new-generation Web guides have popped out the public window to a warm welcome.
LookSmart (NASDAQ:LOOK) was the most-recent debutante, coming out into the public market at a time when Internet IPOs are more "traditionally" priced (rather than price raised just before IPO). Given the market's low tolerance it's not surprising to see LOOK trading at a relative discount to GoTo.com (NASDAQ:GOTO) and AskJeeves (NASDAQ:ASKJ).
The question that brings up is what is the fair value for any of the
three? First of all I believe GOTO looks over-valued based on its
revenue, multiple and market cap. ASKJ also looks frothy but the
recent corporate licensing deals it struck could bode well for its
future more than the numbers show today.
Is LookSmart then a $1.4 billion firm, is that a fair value?
My analysis shows LOOK at about 31x annualized 1999 revenue for the
wholesale search Web portal, vs. 73x for AskJeeves (NASDAQ:ASKJ) and
120x for GOTO. 28x appears tame vs. the other two.
LookSmart revenue for the second quarter also dwarfs the other two as
the table here illustrates:
**********************************************************************
*
.......................GOTO.....ASKJ.....LOOK
Market cap.............$1,732...$797.....$1,436
Latest Q rev...........$3.6.....$2.7.....$11.5
Latest Q loss..........$(7.0)...$(10.0)..$(11.4)
Annualized rev.........$14.4....$10.9....$45.9
Rev multiple
per annualized..........120......73......31
Unique users............7.3......3.2.....10.1
Mkt cap/unique users....$235.68..$251.63.$142.79
all figures in millions except multiples and value/user
(c) 1999 e-harmon.com, inc. may be shared
for non-commercial purposes with copyright in place
**********************************************************************
*
On a per unique user basis LOOK trades at $142 vs. more than $200 for GOTO and ASKJ. Being a more "traditional" guide I think costs LookSmart some appeal whereas GoTo's bid-it-up ad model and AskJeeves' question and answer metaphor for doing search do add value in ways LookSmart does not.
LookSmart is more "old school" search than either of the others in our comparison. So let's take the comparison a little further to a stock that could also be seen in the same camp, perhaps closer in some ways to LookSmart's "wholesale" guide/content approach: Infospace (NASDAQ:INSP), which gathers and distributes content from numerous providers to numerous Web sites.
My analysis shows INSP trades at about 70x estimated 1999 revenue. Another peer that reinforces the notion implied here that LookSmart could begin to look a little smarter on Wall Street very soon.
________
if you enjoyed this analysis please share it with a friend, or they
can sign up now FREE at www.e-harmon.com
________ |
