This article in today's WSJ. Further confirmation of Checkfree's deal with Yahoo. Too bad the market is not open today...I wonder if this article might have spurred some activity...?
April 2, 1999
Tech Center
Yahoo! Executive Says Portal
Is Scouting for Still More Deals
By KARA SWISHER
Staff Reporter of THE WALL STREET JOURNAL
For a company known for its conservative approach to business, Yahoo! Inc. is starting to look like the Internet's good-time Charlie.
Within only three months, Yahoo has used more than $10 billion of its highflying stock to purchase two major Web companies, GeoCities Inc. and broadcast.com Inc. And Thursday, just after the Santa Clara, Calif., Internet "portal" confirmed that it had agreed to spend $5.7 billion for broadcast.com, the Dallas-based Internet broadcaster, Yahoo executives implied that more merger mania lies ahead.
Only last fall, those same executives insisted they didn't need to get pulled into the deal-making frenzy gripping the Internet business. Then came America Online Inc.'s $10.2 billion purchase of Netscape Communications Corp., followed quickly by At Home Corp.'s acquisition of Yahoo rival Excite Corp., a deal valued at $7.5 billion when it was struck. These mergers reoriented the Internet landscape.
Pulse of Acquisitions
"Yeah," says Yahoo Chief Executive Officer Tim Koogle flatly, when asked if his company is scouting for more companies to acquire soon. "I think this is the year for consolidation, which is totally natural given the history of emerging markets. I think we are in what I call a 'pulsing' period."
By pulsing, Mr. Koogle means the market is figuring out which companies should be bought and which can be the acquirers. He counts Yahoo among the latter.
People close to the company say that Yahoo recently has been talking to more potential partners -- from e-commerce services like CheckFree Holdings Corp. to sports sites -- about a variety of new alliances. Mr. Koogle declined to comment on specific talks.
"We think there is a unique value in remaining independent," says Mr. Koogle, who likens Yahoo to a neutral Switzerland. "We think offering a wide-ranging service on a global level is a value that never goes away."
Yahoo's twin blockbuster buys have increased its audience reach as one of the top Internet destinations and added features, but some analysts still wonder whether the company can remain solo in the long run. They suggest that Yahoo will need to hook up with an even bigger partner in order to compete against industry behemoths like AOL.
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Acquisitions Increase Company Date announced Price*
broadcast.com April 1, 1999 $5.7 billion
GeoCities Jan. 28, 1999 $5.0 billion
Yoyodyne Dec. 12, 1998 $32.0 million
Viaweb June 8, 1998 $49.0 million
*Value of stock swap at announcement
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What Yahoo is missing, some note, are major distribution pacts with Internet-access providers, control of important pieces of Internet software and a major media-company alliance. At Home, for example, owns its own high-speed network that runs on cable-television systems and is linked closely with controlling shareholder AT&T Corp. AOL now controls Netscape's popular Web-browser software, on top of its customer-binding giant telephone dial-up system. And both CNET Inc.'s Snap and Infoseek Corp. have close ties to giant media companies, General Electric Co.'s NBC and Walt Disney Co., respectively.
Others think Yahoo can maintain its freedom without these assets. "I think at the end of the day if they keep making these strategic acquisitions, it does not necessarily mean that they have to have a bigger deal," says Paul Noglows, an analyst with Hambrecht & Quist Inc. in San Francisco, who notes that Yahoo's $34 billion market value is already higher than that of many major media companies. "They have to tread very carefully with bigger alliances, since they can become the media company of the future without them; they could shoot themselves in the head if they became AT&T's Yahoo, for example."
Yahoo executives note that they have grown to the top ranks without selling off big chunks of the company. Instead, they have crafted a series of smaller marketing and distribution deals -- such as with search sites, computer companies and access providers -- to attract new Web users to their site. They also have bought an increasing amount of off-line advertising to build the company's well-known brand name. And Yahoo has recently begun talking to cable, wireless and satellite companies to strike similar distribution arrangements.
"Seeing all the musical chairs of the past year, as our competitors have been bought up, it seems to have narrowed their services," Mr. Koogle says. "But distribution has always been and will always be important to us, though the ways we are distributed may change over time."
Company Profile: Yahoo!
That said, the company is still chatting with bigger players and contemplating more tactical moves, a shift in attitude that came after AOL's acquisition of Netscape and the realization among the company's top brass that Yahoo should use its highly valued stock more aggressively.
Yahoo President Jeff Mallett, for example, said in a recent interview that Microsoft President Steve Ballmer and Yahoo executives are constantly talking about a range of possible deals between their companies, and that Yahoo recently struck a small marketing arrangement in Japan. He also noted that Yahoo is more than likely to strike some kind of distribution deal with At Home and perhaps more content alliances with media companies, too.
"We're in the deal flow," says Mr. Mallett. "We are certainly not wall flowers anymore."
Separately, shares of RealNetworks Inc. soared 29% in the wake of the Yahoo-broadcast.com deal, as speculation about the next big Internet acquisition focused on Seattle-based RealNetworks, a leading maker of software for transmitting multimedia over the Internet.
RealNetworks supplies the most popular software for tuning into broadcasts on the Internet, with more than 50 million users. RealNetworks, whose technology is used by broadcast.com, said it has no interest in being acquired by another firm. "We emphatically plan to continue on our independent and successful path," said Steve Haworth, a RealNetworks spokesman.
In Nasdaq Stock Market trading, RealNetworks' stock closed at a record high of $157.875, up $35.6875, or 29%, while Yahoo shares rose $11.375, or 6.8%, to $179.75 and broadcast.com surged $11.8125, or 10%, to $130 a share.
-- Nick Wingfield contributed to this article.
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