Tony: Looks like you scooped the wire services:
AOL-Netscape deal spells trouble for smaller portals
By Duncan Martell
PALO ALTO, Calif., Nov 23 (Reuters) - If America Online Inc.'s talks to buy Netscape Communications Corp. for about $4 billion leads to a deal, the resulting powerhouse would spell trouble for second-tier gateways to the Internet.
"This is not at all good news for the secondary names" such as Infoseek Corp., Lycos Inc., Excite Inc. and others, said Duane Eatherly, a money manager at Banc One Investment Advisors. "You have one of the two 800-pound gorillas enhancing their distribution channel overnight."
AOL, the No. 1 online service, and Netscape, a pioneer in creating the market for Internet browsers, on Monday confirmed they were in merger talks. If AOL were to buy Netscape it would combine two of the five most heavily trafficked sites on the Web. And as this new medium called the Internet has evolved in the past five years, the winners are already becoming clear.
Yahoo! Inc., Microsoft Corp. with its MSN online service and portal, or gateway, and AOL have emerged as heavyweights, leaving behind smaller Internet portal companies like Excite, Infoseek and others. Other early Internet winners are Amazon.com Inc., which sells books and CDs over the Web and search engine company Inktomi Corp.
"This is probably not making their day," Jim Balderston, an analyst at Zona Research Inc. in Redwood City, Calif., said of smaller portals.
Although many of the companies had high-flying initial public offerings, revenue and earnings are still hard to come by on the Internet. Internet companies are racing to create portals, a one-stop shopping site for starting to surf the Web, in the hopes of garnering more revenue from advertisers. |
