Lycos, Netscape Beef Up Web Portal Businesses
Lycos Inc. and Netscape Communications Corp. on Tuesday announced separate deals designed to improve their competitive positions in the Internet portal business.
Lycos acquired WhoWhere Inc., which provides a Web white pages, free e-mail and Web site hosting, for $133 million in stock. Meanwhile, competitor Netscape announced a three-year deal in which Citibank will become the primary personal finance provider on its Netcenter Web portal.
Portal sites attempt to become consumers’ first and primary Web destination by offering a combination of search tools, e-mail, chat, news and entertainment, as well as wide-ranging retail services. Mountain View-based Netscape and Waltham, Mass.-based Lycos compete against industry leader Yahoo Inc. for ad revenues and fees derived from “e-commerce” transactions.
WhoWhere, also based in Mountain View, gives Lycos a fast-growing e-mail service, MailCity, which has 9.3 million registered users, as well as Angelfire, which provides free Web pages to 1.3 million members, according to Jan Horsfall, senior vice president of marketing at Lycos.
“This puts us toe to toe in terms of Web ratings with Microsoft,” said Horsfall, who indicated that Lycos will shop for other sites in the near future as part of its growth strategy.
Analysts viewed the Lycos acquisition as an incremental improvement in the company’s position.
“I don’t place a lot of value in all these people who are allegedly registered” with Web communities, said Allen Weiner, a Web analyst for Dataquest in San Jose. “Does each of these people belong to 20 communities? . . . When a person doesn’t have to commit in any way, shape or form, doesn’t have to pay any money, how can you really track them?”
Weiner noted that “over time, however, a company like WhoWhere brings to Lycos the infrastructure for building a significant online community” based on common interests and commercial relationships.
Lycos shares dropped $4.38 to close at $63.56 on Nasdaq. Shares of Santa Clara-based Yahoo fell $2.63 to $91.38, also on Nasdaq.
The Netscape-Citibank deal represents a step in Netscape’s effort to catch up with portal competitors by improving content on Netcenter. Beginning in the fall, New York-based Citibank will gradually roll out a full spectrum of online services, including home banking, investment advice, stock trading, mortgage loans and insurance.
Perhaps more significant for the Internet industry, the deal represents a new business model based on bringing customers to Citibank’s services rather than relying solely on advertising-generated revenue.
Citibank will pay a set fee, which the companies did not disclose, for each customer it obtains via the Netcenter site, Netscape said.
Netscape shares fell $1.69 to $29.50 on Nasdaq.
