I would think that the following article would indicate Gnet as being extremely undervalued when compared against Nov. Mediametrix numbers, especially since we are actually profitable.
NetStock! By Steve Harmon
chairman & CEO
e-harmon.com, Inc.
Internet Investment Provider
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2000.01.13: Value Per User For Top 25 Public Web Networks
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The value of a digital enterprise, especially Web networks, comes from several factors. But the most important are users and user experience.
Users drive growth, revenue, and earnings. The user experience draws users back and provides a reference for viral growth. Which, in turn, drives revenue, earnings and value.
That?s why in the table below a huge gap, a chasm even, exists between the lowest value per user Web media concern, About.com (BOUT) and AOL (AOL) at the other end of the spectrum. User experience.
e-harmon's webnetrics ? TOP 25 Web Networks Value Per User
Company Symbol Market Cap/Unique User
About.com Sites BOUT $101.52
Juno / Juno.com JWEB $170.70
ZDNet Sites ZDZ $177.08
Go2Net Network GNET $221.41
Lycos LCOS $248.71
LookSmart LOOK $261.67
Earthlink.net ELNK $296.15
Mypoints.com MYPT $311.79
Barnesandnoble.com BNBN $351.15
Goto.com GOTO $455.97
CNET CNET $458.85
CitySearch-TicketMaster Online TMCS $481.72
eToys Sites ETYS $524.08
Macromedia MACR $551.94
Ask Jeeves ASKJ $629.38
Toysrus.com TOY $682.34
Real.com Network RNWK $810.74
Excite@Home ATHM $1,015.03
Amazon AMZN $1,549.78
Infospace Impressions INSP $1,555.22
eBay EBAY $1,677.25
Yahoo Sites YHOO $2,586.99
AOL Network - Proprietary & WWW AOL $3,113.76
¸ 2000 e-harmon.com, Inc.
User experience also provides an environment for what a Web firm can and cannot provide. You don?t buy a book from Goto.com (GOTO) and sell a latest gadget on MyPoints.com (MYPT). Although digitally each company could do both.
The key valuation driver for the more highly valued properties relies on the user base reaching critical mass (enough) while at the same time having more than content to experience
The leaders in value per user have a sufficient user base and wrap commerce around that.
Without a minimum number of users the companies in the lower value per user arena face branding, marketing and channel challenges. That directly hurts their valuation per user.
Yet fundamentally a Web user on About.com can also be a user on Infospace.com (INSP). However, given Infospace?s move into wireless it gets recognition for unlocking a new path for revenue and future earnings. Hence the value is higher per user.
The ultimate driver of value in many of these companies above may be consolidation. Some of the mergers have taken place while others could.
For the lower value per user it?s worth noting that marketing and sales costs alone could exceed what the market cap per unique user is for the site.
For that reason, the buy vs. build equation could start to unleash a wave of mergers as the buy decision becomes more attractive for many reasons, chief of which is users at sites which lack the tens of millions of eyeballs and wallets probably need to merge with others to create critical markets.
Translation: perhaps the higher value per user firms at the bottom of the table may allow them acquire the firms on the lowest end for effectively very cheap.
Therefore, in the next 18 months may see some user arbitrage as investors maybe start to understand the value gap and how a user from a lower-valued firm may be worth a lot more in the higher-valued firm.
Compare Harmon's list to Nov. Mediametrix:
Rank Digital Media/Web Properties Unique Visitors(000s)
1 AOL Network - Proprietary & WWW 54,211
2 Yahoo Sites 41,786
3 Microsoft Sites 38,334
4 Lycos 29,150
5 Go Network 21,981
6 Amazon 15,357
7 Excite@Home 14,975
8 Bluemountainarts.com 12,742
9 Time Warner Online 12,445
10 Go2Net Network 11,472
11 About.com Sites 11,032
12 Real.com Network 10,842
13 eBay 10,553
14 AltaVista Sites 10,485
15 CNET 9,393
16 LookSmart 9,172
17 Snap Sites 9,124
18 ZDNet Sites 8,866
19 Xoom.com Sites 8,457
20 Goto.com 7,347
21 Juno / Juno.com 7,264
22 Macromedia 6,450
23 AT&T Web Sites 6,351
24 Smartbotpro.net 6,214
25 Infospace Impressions 5,922
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