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To: fernand cloutier who wrote (4013)	5/5/1998 10:10:00 PM
From: Glenn D. Rudolph	Respond to of 164684

Excite deal shows virtual real estate getting pricey Reuters Story - May 05, 1998 21:32 %BUS %ENT %TEL XCIT NSCP MSFT AOL YHOO MCIC T LCOS SEEK V%REUTER P%RTR By Andrea Orr PALO ALTO, Calif., May 5 (Reuters) - Even on the World Wide Web, prime real estate is getting tight. That is why Excite Inc., one of the top directory providers on the Internet, agreed on Monday to plunk down $70 million to put its name on some of the still unclaimed space in cyberspace. The deal, in which Netscape Communications Corp. and Excite will collaborate on an Internet search service, is all the more interesting since Excite has yet to turn a profit and had revenues of just $23 million in the latest quarter. Excite President George Bell justified the large payment by saying the company was investing in valuable property, "perhaps the last piece of undeveloped real estate on the Web." What once seemed like a cyberspace of infinite opportunities is increasingly viewed as a narrow space, where the key properties are going fast. Microsoft Corp. has teamed up with the privately held search company Inktomi. The world's largest online service, America Online Inc. , offers searches based on Excite technology. Yahoo! Inc. and MCI Corp. already are benefiting from a marketing alliance similar to the one formed Monday between AT&T Corp. and Lycos Inc., another top Internet directory scrambling to make itself the destination of choice for people visiting the Internet. Perhaps the next best thing to being the destination of choice is being the destination of default. While the terms of these deals vary, all are essentially aimed at insuring more viewers see a given brand name when they log on to the Internet. And with advertising dollars increasingly concentrated in a small number of top Web sites, the Internet is starting to look like a pretty small world. "Sure there are hundreds and thousands of Web sites out there, but only a handful of them make up the elite," said Abhishek Gami, an analyst with William Blair in Chicago. By aligning with Netscape, Excite is buying one of those elite properties. Netscape's popular Netcenter Web site is guaranteed millions of viewers who go there when they launch the Netscape browser. The two companies will collaborate on a new search service, that will bear the Netscape name, use Excite's Internet search technology, and steer millions of viewers from Netscape onto Excite pages. During March, the last month for which it has reported viewer data, Excite averaged 40 million page views per day, compared with 95 million per day for Yahoo!, currently the clear industry leader. Excite said, however, that the additional exposure from the Netscape deal will expand its "reach," or the portion of Internet users who see its brand, to 61 percent, well above the 27 percent it currently reaches, and, Excite says, beyond Yahoo's reach. Debate continues over whether the Excite deal was worth $70 million. Yahoo! Chief Operating Officer Jeff Mallett said Yahoo! was offered a similar deal with Netscape but declined, in part because "we couldn't get the math to work." "From our standpoint, the $70 million was not an efficient way to acquire new audiences," Mallet said in an interview. But for other companies, the latest alliance reprents a lost opportunity. "I think the company strategically most negatively impacted (by the Excite-Netscape deal) is Infoseek ," said Gami. "They are one of the few that hasn't found a major partner yet." Infoseek Corp. had been reported to be the top contender to form a partnership with Netscape, since it has been less aggresive than most in forming the kind of alliances many experts believe are critical to building audiences. Infoseek did not go into detail, but suggested the high cost of the deal was a deterring factor. "We looked at the combination of resources, human and financial, and we decided to continue on the path we're on now," said Barak Berkowitz, vice president of marketing at Infoseek. "We looked long and hard at a deal with Netscape, but we have other things on the table."

To: fernand cloutier who wrote (4013)	5/6/1998 12:19:00 AM
From: Mark Myword	Respond to of 164684

Fernand - stock options as compensation are a complex subject , but I'll try to provide some simple answers .... 1&2 ) The " cost " of the options is in the dilution of the future earnings and ownership of the enterprise. This shows up when the options are exercised , naturally. The argument is that income for the current period is overstated , because the money which will be effectively "paid" to the option holder , in the form of shares , is not run through income as an expense in the current period , or ever. It is sort of like a hidden cost. If a company pays $1,000,000 this year to an Exec , that million is an expense. If it gives him the million through an option grant , that doesn't hit expense , but he walks away with the same million from the company. 3) There are various accounting texts that show you the mechanics of the entries; I can't think of an article I've read recently that goes into a lot of detail , but there are many , many articles from the past five years or so , as this is a very controversial topic for SEC , accounting types , etc. The bottom line is that the financials show you " XYZ made $48 million profit this year " but don't tell you that the Exec has an option package that is going to put $10 million cash in his pocket , and dilute the ownership for all current shareholders. Try a search , maybe there is a better article around.