news.com
Does CDnow, N2K
merger add up?
By Kora McNaughton
Staff Writer, CNET News.com
March 12, 1999, 2:10 p.m. PT
In the five months since CDnow and N2K
announced their merger, Amazon has clinched
the top online music sales spot. And CDnow,
long the subject of takeover rumors itself, has
failed to attract a buyer. Shareholders are set to
vote on the merger next week, but the
combined company's prospects are murkier
than ever.
The deal will almost double CDnow's customer base
from 980,000 to more than 1.7 million, but its stock
is wallowing around 16, far off its 52-week high of
39.25, which it reached last November at the peak
of Wall Street's excitement about shoppers using
the Web to buy holiday gifts. Since the merger was
announced, Amazon.com, which trades around 133,
has released its own music sales numbers: $50
million for the second half of 1998, close to CDnow's
total 1998 revenue of $56 million. Separately or
together, N2K and CDnow face an uphill battle.
The new company, which will be called CDnow/N2K,
has plenty of traffic, "but traffic is very fickle on the
Web," said Mark Hardie, an analyst with Forrester
Research. "When a big brand gets in, the traffic
goes that way." It took Amazon less than six months
to take a large market share for itself, he added.
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