You talk about AOL being overvalued, but at least being an ISP, they have a direct revenue stream, and a database of real people, across a broad demographic spectrum (AOL, CompuServe, NetScape, Mirabilis etc.). EBay at least gets a cut of each transaction -- again, a direct revenue model. More transactions means more money.
The one that truly is a mystery is the Internet "TV Guide" site, Yahoo! An indirect revenue play who has 13 different databases of largely incomplete or fictional names (unlike AOL's or AMZN's real business model, one does not need to provide a real name and credit card to use Yahoo's bookmarks) ...and for all of its 200 million or so in assets, it's valued at over $24 BILLION!
At least now that it's over 20 billion, a few analysts are finally starting to stand up and point out that the Emperor has no clothes and that for a ad driven site that does not even own its core search service, valuation is getting way ahead of itself. The WSJ in an article last Weds, 11/25, is pointing out that the retail unsophisticated and uninformed investors, operating in lemming mode, are churning this stock to oblivion.. along with a few others.
Will be interesting to see just how high it will go before the lemmings hit the cliffs and we witness a spectacular crash. I wouldn't touch Yahoo with a 10 foot pole at these prices, esp. after the AOL / NetScape announcement -- major competitor with a direct business model who will only spin up Microsoft's resolve to dominate in this sector too. The Netscape influence will help AOL get their technical act together so they're completely compatible with the rest of the web, then watch out. ..and don't forget Microsoft's recent purchase of two companies to gain online audience, plus replacing Pete Higgins at the Portal helm with Steve Ballmer (acting -- agressively as always). Yahoo! will get stepped on during the battle of the 800 lb. gorillas until their valuation is more sane, and then they may have a shot at being acquired. (but remember 3 of the potential largest suitors passed on Yahoo when it was at $24/share, so now at $215, who can touch them?) |
