Bill Fleckenstein's analysis on the GNET deal from today's Market Rap: stocksite.com
Internet stocks hot... Internet stocks were red-hot for two reasons: First, the Internet conference mentioned earlier, and second, we had another change of control in the Internet sector. None other than the folks who bring you the Rap, Go2Net (GNET), now will be controlled by Paul Allen's investment arm, Vulcan Ventures. The terms of the deal are such that Go2Net now is about a $2 billion company. By my calculations, it looks as though the folks at Vulcan bought a convertible preferred, which worked out to a cost probably in the mid-60s, and then they bought some stock from management. They're tendering for stock in the open market at $90. If all this stock were purchased as planned, it would give them an average cost, by my calculations, of somewhere in the high 70s. Given that the stock now is trading at $113, it looks like they've already made themselves a few hundred million dollars. This obviously will be an important linkup, and on a personal note I'd like to say congratulations to everyone at Go2Net. As always in the interest of interpersonal full disclosure, I am lucky shareholder of Go2Net.
I haven't seen a very clear analysis of the terms of the deal on the tape, so I'm going to provide one based on my rough calculations. Obviously these numbers are changing all the time, but using today's closing price and the approximately 18-19 million shares outstanding, it would place a value of roughly $450 per user for Go2Net. The deal makes it the second highest in that category behind Yahoo, and puts Go2Net ahead of Excite and Lycos.
Any alternative views?
Regards,
Ron |
