GO2NET'S DOWNTOWN SEATTLE OFFICES,
on the top floor of one of the city's tallest skyscrapers, offer
perhaps the best view of Puget Sound to be had without
getting on a plane. But the view was even better Monday
after Allen's Vulcan Ventures Inc. invested $300 million in
Go2Net, and agreed to buy up to $450 million worth of
stock in the coming weeks. Together, the purchases would
give Allen — the Microsoft co-founder and billionaire
entrepreneur — control of 54 percent of the company's
stock.
Such an all-cash offer is virtually unheard of in Net
deals, and investors liked what they heard. After trading in
Go2Net opened at midday Monday, the stock soared 26
3/8 to 113 3/8. Go2Net is close to the hearts of many
technology investors, who frequent the firm's Silicon
Investor bulletin board service.
Allen's plans for the content conglomerate go beyond
the Web, however: he wants to create a portal site for his
cable and set-top box ventures, echoing the strategy of
AtHome Inc.'s recent acquisition of Excite Corp.
WHAT'S IN IT FOR GO2NET
Go2Net's stock had been rising in the last four months,
both on Wall Street and among Internet users. The
company's rocket-like march up the list of most popular
Web sites was fueled by acquisitions of a number of small
Web content companies, like the $35-million purchase of
popular stock bulletin board Silicon Investor last summer.
Tiny Go2Net was able to outbid suitors CNet, Intuit and
CBS (Through Data Broadcasting Corp.) for the popular
community site because it promised SI independence —
Go2Net is much more a loose confederacy of separate
Web properties than it is a portal site.
WHAT'S IN IT FOR ALLEN
Allen's swift rise in the cable industry parallel's
Go2Net's rise online. Vulcan Ventures has spent $11 billion
cobbling together cable firms under the name Charter
Communications. It now has 3.5 million customers, making
it the seventh-largest cable operator in the U.S. “They've
come out of nowhere to be in the top tier,” said analyst
Bruce Leichtman of the Yankee Group.
As for Allen's wired world, Charter offers its own
flavor of broadband cable services, akin to services offered
by AtHome Corp. and RoadRunner. Now, Go2Net will be
the portal site for Charter Communications' cable modem
service. Such instant access to Charter's customers made
Horowitz giddy, but what does the purchase really do for
Allen's wired world plans?
“That's a tough one,” Leichtman said. “He's looking
for proprietary high-speed content to differentiate his
service from other offerings. To get past the low-hanging
fruit it's got to be more than just speed.”
Some observers say the deal makes clear Allen isn't
interested in partnering with AtHome or RoadRunner, but
instead plans to become a third major provider of cable
modem services.
“You have to ask yourself, ‘Do you want to share the
Net upside with a third party, or do you want to do it
yourself?” said Michael Harris of Kinetic Strategies, which
studies the cable modem business. “For Allen and for
Charter, it would seem they'll want to control as much of
that as possible.
“If you look at what AtHome has done with Excite,
having a portal to go along with your broadband service is a
piece of the pie. If you own the pipe it's nice to own some
of the content, too.”
One big difference between AtHome's purchase of
Excite and this deal — Excite cost $6.7 billion when
announced, compared to Go2Net's potential price tag of
$750 million.
“AtHome is focused on broadband to the PC, and we
think the playing field is larger than the PC,” Savoy said.
“There's a philosophical difference.”
Savoy figures Charter will offer electronic commerce
both via PCs, through cable modems, and on televisions,
through set-top boxes. In either case, Go2Net will be the
doorway to the dozens of digital media companies in
Vulcan's portfolio.
“We look forward to introducing them to as many
companies in our portfolio as possible,” Savoy said.
WHAT IS GO2NET
Go2Net.com might be called a second-tier portal site.
It offers basic services similar to well-known portal sites like
Yahoo and Lycos, including search. But its premier site is
Silicon Investor, which is one of the Internet's most popular
destinations for high-tech investors to swap stock tips — at
the time of the acquisition, Go2Net said it had 5 million
unique visitors per month.
Visitors can read the amateur advice posted there for
free — it costs $5 a month to subscribe, which includes the
right to post notes. Go2Net says it has over 100,000 paying
subscribers.
While there are competing investing bulletin boards on
Yahoo and The Motley Fool, Go2Net cofounder John
Keister argues that SI bulletin boards are higher quality
because all posters must register and pay before they can
submit a message.
The company has been building its portal site by
acquiring small content companies since its launch in 1997.
Along the way, it added search engine MetaCrawler,
gaming site PlaySite, and HyperMart, a network of small
business Web sites.
Go2Net stock barely hit the radar with investors after it
went public in April 1997, bouncing from a split-adjusted 5
to 11 in October of last year. But after analyst Dalton
Chandler initiated coverage at the end of the year, and the
company posted a small operating profit, shares
skyrocketed.
The company's stock with Web browsers has risen
almost as fast, and the company now claims it gets 1.5
million unique users per day.
|
