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Non-Tech : pamc -- Ignore unavailable to you. Want to Upgrade?

To: KM who wrote (295)	5/21/1999 7:01:00 AM
From: Steven M. Kaplan	Respond to of 570

WebMD deal sets new standard for Internet math By Andrea Orr PALO ALTO, Calif., May 20 (Reuters) - Internet company values went from perplexing to mind-boggling on Thursday when online medical data company Healtheon Corp. agreed to buy a little business called WebMD for about $7.9 billion. It wasn't that WebMD has no profits -- Internet companies rarely do and investors have long ago gotten over it. But unlike counterparts like Geocities and broadcast.com that were acquired earlier this year at multibillion dollar price tags, WebMD does not even have much of a revenue base. Last year, in fact, its revenues came in below the annual income of a typical Silicon Valley software engineer. According to a filing with the Securities and Exchange Commission, WebMD, which provides online medical information and services for consumers and doctors, had revenue of $75,000 in the nine month period ended Sept. 30. That's thousands of dollars -- not millions. And yet, WebMD was considered such a hot property that as rumors of the acquisition by Healtheon crept out, Healtheon's stock price surged, adding a few billion dollars to the value of the deal in a matter of days. Healtheon is paying for WebMD with its own stock. Two days ago terms of the deal put the price tag around $5.5 billion. That had surged to $7.9 billion on Wednesday, and up to around $9.87 billion on Thursday, as Healtheon stock continued to surge on news of its acquisition. "It is by far the biggest deal in terms of the total value," said Tim Miller, President of the San Francisco consulting firm New Media Resources, which tracks Internet mergers and acquisitions. "I don't think there is any explaining it at this point. People are basing their expectations on some sort of future potential. It's gotten beyond ridiculous," Miller said. But Healtheon wasn't the only one willing to pay a high price for a piece of WebMD. The complex deal reached includes large investments from other prominent Internet players, including $250 million from Microsoft Corp , and $25 million from Excite Inc . Asked to comment on the high price and the broad interest, a Healtheon spokesman said it all came down to future potential. He said that unlike many other Internet-based health information services, WebMD has developed a broad vision for selling multiple services. And its alliance with so many Internet heavyweights is likely to help WebMD sign up paying customers a lot more quickly than it would have been able to do alone. Microsoft is underwriting $150 million in physician subscriptions, meaning that doctors will be able to get the service for free.