Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: BGR who wrote (38513)	2/7/1999 10:27:00 AM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

I will check the Euro sites. Thanks much! -Apratim. Trust me on Reel.com. Glenn

To: BGR who wrote (38513)	2/7/1999 11:07:00 AM
From: Glenn D. Rudolph	Respond to of 164684

5 throughs on general rotation banner ads on the portal deals they have been signing. Increasingly, they are looking for some measure of depth, of influence if you will. Why is depth important? A metric that quantifies depth will give investors a better understanding of how influential, for example, Yahoo! is to a Yahoo! user, that is, how much Yahoo! can “guide” that user to a certain merchant, a certain content provider, or a certain brand message. This, in turn, will be very valuable to advertisers and merchants. Which brings us back to the Yahoo!-GeoCities merger, a deal that we think stands out in this season of Internet M&A activity for two reasons: (1) it makes great strategic sense and (2) it's (uniquely) accretive to the acquirer's P&L. The addition of GeoCities to the Yahoo! umbrella seems logical to us within our breadth versus depth thesis; that the addition of 3.2 million+ homesteaders (GeoCities' content creators) and 19 million users to the Yahoo! user base not only increases the stickiness of the service generally (go to any one of the GeoCities home page to see the array of quality content on the site) but adds a very loyal 3.2 million user base (in the form of homesteaders) to the Yahoo! audience. Immediately Yahoo!'s reach increase 10%, from 48% to 58% of all Internet users, putting in the rarefied air of AOL. Imagine, if you will, how the capital markets would react if AOL could pick up 3.2 million new subscribers growing at 32% sequentially? From our hill top, we think there is a smaller, not larger, difference to be eyed between subscribers and homesteaders. In addition to these elements, the synergies in the combination are manifold. On the commerce side alone, Yahoo! can enable these 3.2 million homesteaders' sites with tools from Viaweb (another smart acquisition), allowing them to sell directly from their site of allowing others to sell from their site. And since we like to relate most things Internet back to AOL in one form or another, we'd point out that Yahoo! benefits as much as AOL does from what Bob Pittman calls shared infrastruuctrure, which for a story that is being driven off of cash flow and earnings, is as important as any top line implications. This point provides a nice segue into the second reason we like the transaction so much: it's accretive. Though we thought both the AOL/NSCP and the ATHM/XCIT deals were smart strategically, we're still working on just what the models could look like longer term given the complexities of the businesses and the many moving parts each of the models already had. In contrast, the Yahoo!/GeoCities P&Ls come together nicely. And though Yahoo! suggested that the deal would likely be neutral in Q3 and Q4 of this year, they did state that it would be nicely incremental in 2000. Our own “shadow” model on GeoCities (having been stung by some recent M&A deals, we're working on our timing for picking up coverage of new companies before they get swallowed up) had them doing about $40 million in 1999 and about $70 million in 2000. This would be a nice increase to the $368 million and $500 million estimates we have for Yahoo! in 1999 and 2000 respectively. We'll be coming out with a revised model soon, but we think the take-away from this transaction is clear; a smart, accretive deal that points up why we like this management team so much; aggressiveness. Not a week went by after GeoCities became poolable and Yahoo! was already talking about a merger with the GCTY team. No “not invented here” or hemming and hawing. Investors shouldn't under estimate the value of aggressiveness in this space. Ted Leonsis, Revisited The last two weeks have proven to be pretty propitious for Ted Leonsis. You'll recall in one of the previous editions of The Internet Capitalist