Disney got a bargain:
...Yesterday, Walt Disney's announcement that it would buy a minority stake in Infoseek initially sent Infoseek stock up as much as 7 1/2 points to a midmorning high of 42. But when the deal's complex terms seemed to indicate Disney got a bargain, the gains all but evaporated, and the shares finished up only 5/8 at 35 1/8.
PaineWebber analyst James Preissler, for instance, calculates that the entertainment company is gaining its 43% minority stake at an effective price of about $7 a share, about a fifth of Infoseek's current market price. "In essence, Disney got a great deal from Infoseek," Mr. Preissler told clients late yesterday.
The same kind of analysis sent the stock of other Internet companies down as well. Excite, which had been up more than 5 points earlier, closed down 3 to 73 1/8. Yahoo, up 5 3/4 at one point, finished down 2 7/8 to 127 3/4. But Lycos, which had been up 4 1/2, held on to some of its gains to finish up 2 1/8 to 61 5/8 -- seemingly because it is viewed as one of the likeliest to forge a similar alliance with its own big media patron.
PaineWebber's Mr. Preissler, for one, says the Disney-Infoseek alliance, whatever its terms, may spell tougher competition for its rivals. "Without a doubt, Infoseek is much better positioned today than yesterday with Disney behind it."...
-WSJ's "Heard on the Street" interactive2.wsj.com |
