@Home to Buy Excite as Portal Stakes Rise
@Home Corp. said Tuesday that it agreed to acquire Excite Inc. in an all-stock deal valued at $6.7 billion, giving a much-needed boost to the Internet portal site and continuing a steady stream of similar alliances involving communications and technology companies.
Prominent deals have included America Online Inc.’s $4.2-billion plan to acquire Netscape Communications Inc., announced in November, and Walt Disney Co. taking a major stake in Infoseek Corp. last June. It leaves Yahoo Inc. and Lycos Inc.--which acknowledges shopping for a partner--as the remaining large, independent portals.
Portals offer search services, chat, shopping, news and entertainment in an effort to become primary destinations for users, who in turn buy products and view ads.
@Home--the leading provider of high-speed Internet access via modems linked to cable television wires--hopes to challenge AOL and Yahoo in part by wooing customers from far slower telephone-modem access.
“This provides @Home with a very significant opportunity to capture subscribers early on and migrate them over time,” said Daniel Rimer, an analyst with San Francisco investment bank Hambrecht & Quist.
@Home delivers Internet service to 330,000 subscribers, but analysts expect cable modems and other methods of broad-band access to gradually supplant conventional modems as the standard for homes and small businesses.
Also Tuesday, the Snap portal, owned by San Francisco-based CNet Inc. and NBC, announced a general-service Web site with enhanced content for cable-modem users.
These developments “place greater urgency on other portals to look at alternative access and to move to broad-band,” said Patrick Keane, an analyst with Jupiter Communications in New York.
The deal looks timely for Excite, which has recently lost momentum in the race for “eyeballs,” as Internet users are often called in industry circles.
“Excite went from a very strong No. 2 to a No. 3 or 4,” Keane said.
The @Home-Excite combination, which requires approval by the company’s shareholders, offers substantial synergy, analysts said. It potentially combines Excite’s personalized content for its 20 million registered users with @Home’s plan to deliver Internet connections via a variety of devices, including personal computers and televisions.
“Excite is the most advanced portal on the whole concept of personalization and tailoring content to subscribers,” said Milo Medin, @Home’s founder and chief technology officer.
Medin said Excite Chief Executive George Bell will head @Home’s media division, including Excite. No layoffs are expected, Medin said.
Shares of all the major portals rose Tuesday, with Excite rocketing $42.50 to close at $110 on Nasdaq, a new high. @Home jumped $13.38 to close at $115.38, also on Nasdaq. Both companies are based in Redwood City, Calif.
CNet stock rose $26.75 to close at $99.75 on Nasdaq, also an all-time high.
AT&T--which; is planning to acquire cable-TV giant Tele-Communications Inc., @Home’s largest shareholder--emerged as another big winner. The telecom titan has promised to make huge investments to become a key force on the Internet, and Tuesday’s deal brings it closer to that goal. AT&T; shares moved up $7.13 to close at $91.38 on the New York Stock Exchange, a 52-week high.
Lycos could be next on the block, given that Yahoo’s $31.9-billion valuation probably puts it out of reach. Jan Horsfall, Lycos’ vice president for marketing, said his company rejected an offer from @Home and has instead been discussing a partnership with media giants Time Warner, CBS, AT&T;, Bertelsmann and NBC, with an eye toward consummating a deal in as little as three months. Sony and Microsoft are also possibilities, he added, but Lycos considers them less desirable matches.
“For the big media companies, it’s a game of musical chairs, and we’re one of the chairs,” Horsfall said.
Unlike Excite and Yahoo, which concentrate on being all-purpose Web sites, Lycos has pursued a network strategy, acquiring a range of more specialized sites to rapidly build a cumulative presence.
According to Media Metrix, a Web-survey company in New York, the strategy has boosted Lycos into the No. 4 spot among the most trafficked Web properties, with about 45% of users visiting at least one Lycos property in November. AOL, Yahoo and Microsoft make up the top three, with Excite ranking sixth.
“Lycos has been far more aggressive, and the Street likes what they are doing,” said Keane. Shares in the Waltham, Mass-based portal shot up $25.06 to close at $112.94 on Nasdaq.
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Portal Power
@Home’s proposed $6.7-billion acquisition of Web portal Excite highlights a rush by media companies and others to expand their reach on the Internet. Recent deals by major portals:
* Yahoo: Independent, involved in numerous alliances to provide content and services on its site.
* America Online: Announced in November that it will acquire Web software developer Netscape Communications for $4.2 billion in stock.
* Excite: Agreed on Tuesday to be acquired by high-speed Internet access provider @Home for $6.7 billion in stock.
* AltaVista: Purchased by Compaq Computer as part of its acquisition of Digital Equipment for $9.6 billion in cash and stock. The deal was finalized in June.
* Lycos: Independent but considered an acquisition target.
* Infoseek: Agreed in June to sell a 43% stake to Walt Disney in exchange for its majority stake in Starwave and $70 million in cash. Disney last week launched its portal venture, Go Network, which is run by Infoseek.
* Snap: Expanded its offerings, including a high-speed Internet access service announced Tuesday. NBC spent $64 million last summer to buy a 4.99% stake in online content firm CNet, Snap’s parent, and 19% of this portal.
Sources: Times and wire reports
Researched by JENNIFER OLDHAM / Los Angeles Times
