Follow-up:"AOL-Netscape Deal Spells Trouble for Smaller Portals"
Proposed merger could squash rival services that can't offer as many extras.
"...If America Online's talks to buy Netscape Communications for about $4 billion in stock lead 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, Lycos, Excite, and others, said Duane Eatherly, a money manager at Banc One Investment Advisors. "You have one of the two 800-pound gorillas enhancing its distribution channel overnight."
AOL, the number-one 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, Microsoft with its MSN online service and portal, and AOL have emerged as heavyweights, leaving behind smaller Internet portal companies like Excite, Infoseek, and others. Other early Internet winners are Amazon.com, which sells books and CDs over the Web, and search engine company Inktomi.
"This is probably not making their day," Jim Balderston, an analyst at Zona Research, said of the smaller companies.
Although many of the companies had high-flying initial public offerings, revenue and earnings are still hard to come by online. Internet companies are racing to create portals, one-stop shopping sites for starting to surf the Web, in the hopes of garnering more advertising revenue..."
© 1998 Reuters PC WORLD IDG.net November 24, 1998, 3:30 a.m. PT
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