Thanks for your comment. There are points for us to be able to look at and hopefully benefit from if we are right. Just as the CAT story was seen coming on December 8th on this thread because of knowledge of lay offs in that sector, we have to consider what may be forthcoming.
SEEK it appears is working in conjunction with Merrill in supporting share price for the Dec. 21 shareholder vote regarding Quando being acquired by SEEK. This makes sense as it will reduce the number of shares that will be required to be issued.
But, was Cohen's analysis nothing more than cute copying of a SEEK filing? <ggg>
AMORTIZATION OF GOODWILL AND INCREASED OPERATING EXPENSES WILL DELAY PROFITS
Infoseek's acquisition of Starwave was accounted for under the purchase method of accounting. Under the purchase method, the purchase price of Starwave was allocated to the assets and liabilities acquired from Starwave. Infoseek will incur a charge for in-process research and development of Starwave of $72.6 million in the quarter ended December 31, 1998.
In addition, intangible assets related to developed technology and assembled workforce of Starwave are estimated at $45.2 million and will be amortized over two years. Intangible assets related to goodwill and joint ventures are estimated at $656.3 and $178.5 million, respectively, and will be amortized over ten years. In addition, Infoseek expects to have increased operating
expenses associated with the expanded operations of its business and the development, launch and promotion of GO Network. To the extent that such expenses are not timely followed by increased revenues, Infoseek's business, results of operations, financial condition and prospects would be further materially adversely affected.
In connection with the proposed Quando acquisition, intangible assets related to goodwill, developed technology and assembled workforce are preliminarily estimated at approximately $16.9 million and will be amortized over two years. Infoseek also expects to take a charge for in-process research and development of Quando of approximately $4.3 million in the quarter ending December 31, 1998.
As a result of these acquisitions, management currently estimates that Infoseek will not have profits until at least 2002. Without these acquisitions, the amortization of goodwill and other intangibles from the acquisition of Starwave, Infoseek would not have profits until at least 2000. The estimates of when Infoseek will achieve profits are forward-looking-statements that are subject to risks and uncertainties. Actual results may vary materially as a result of a number of factors, including but not limited to those set forth
under "--Uncertainties Regarding Integration of Operations," "--Risks Regarding Development, Launch and Acceptance of GO Network," "--Dependence on Third Party Relationships, Advertising Relationships and Joint Ventures," and "--Risks of Acquisition Strategy."
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING
Infoseek currently anticipates that its cash and other available sources of funds will last through at least December 31, 1999. The other available sources include Infoseek's equipment term loan facility, payments under a note in principal amount of $139 million from Disney and cash generated from advertising revenues. After that time, Infoseek may need to raise additional funds.
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<PAGE>
Infoseek may decide to increase expenditures for any number of activities, including:
. expanding more quickly
. developing new or enhancing existing services or products
. promoting GO Network or other services, or
. acquiring complementary products, businesses or technologies
If Infoseek does any of these activities, Infoseek may be required to raise additional funds sooner than currently anticipated. If any additional funds are raised through the sale of stock or convertible debt, the percentage ownership of Infoseek's current stockholders will be reduced. Such stock or convertible debt also may have rights, preferences or privileges greater than Infoseek's common stock.
Additional financing may not be available on good terms, or at all. If Infoseek cannot raise enough additional funds, Infoseek may not be able to continue expanding, developing new or enhancing existing services or products, or promoting GO Network or other services or acquiring other businesses, products or technologies. Infoseek's business, results of operations, financial condition and prospects could be seriously harmed.
Compare the last filing by SEEK with Cohen's release. I suspect the reason we see two different recommendations regarding near term and long term is for the stock transaction with Quando and it worked great.
$55 12-18 months out puts us into late spring of the year 2000. By that time we will know if the company is getting closer to their goal of becoming profitable late into the year of 2002. If that is the case, the $55 is very reasonable. Between then and now, this stock is on my trading list to buy and short.
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