Synergies Little Understood
WEEKLY COMMENTARY by Andrew Goodman - July 31, 2000
top story is the announced merger of Go2Net (GNET), a second-tier
consumer portal company, with Infospace (INSP), a provider of Internet
and wireless infrastructure services. Continued weakness in the
market for tech stocks has exaggerated the decline of Infospace
stock in the wake of the announcement. If the merger is approved,
it marks a significant turning point for Go2Net, which has taken
several quantum leaps forward in its short history since going public
unconventionally as a small-cap NASDAQ company in 1996.
led remarkable Go2Net growth
leadership of youthful chairman and founder Russell Horowitz, Go2Net
acquired some winning properties almost entirely for stock: Metacrawler,
Silicon Investor, Hypermart, Authorize.net. An enormous turning
point following the move into an upscale office space in Seattle
(Horowitz negotiated a good price) was a large equity investment
from Microsoft billionaire Paul Allen's Vulcan Ventures, which saw
Go2Net's content, technology, and talent as a good fit with Allen's
plans for a broadband empire (Allen's Charter Communications went
public this year).
to a Seattle Times story, Horowitz and Infospace chairman and founder
Naveen Jain have informally talked about a merger for a couple of
The Seattle Times story
visited Jain again about a month ago and was introduced to [Arun]
Sarin, the recently arrived InfoSpace CEO.
gave me a thumbnail sketch of Go2Net, and I said, `Wow, wouldn't
it be great if the companies were together,' " Sarin said. "On my
way to the airport, I called Naveen [Jain, Infospace founder] and
said don't let him go. Do the deal now."
"Arun is to
blame," joked Jain. "
on as vice chairman and President; Sarin will be vice chairman and
with Infospace would be another major chapter in the amazing Go2Net
makes content delivery seamless
is a major player on the Internet infrastructure scene, but also seems
poorly understood. It made early strides as a provider and technical
"delivery system" of the underlying information - weather, finance,
local information, maps, and so on - that makes major web information
providers, from AOL on down, tick. It's not just about the content
itself, but also about providing services and technologies that
keep the content humming properly in different environments.
that environment has been wireless. Infospace is trying to make
its mark as a company that can deliver content to handheld and WAP-enabled
devices just as easily as to regular Internet-connected terminals.
The technical requirements of this would seem to require ongoing
development, consulting, and service. To master these areas, Infospace
has made several strategic acquisitions, including some companies
that really seem hotter and more fundamental than Infospace itself
ever was at a similar stage of development, including Saraide , a cutting-edge wireless content delivery
powerhouse. Infospace currently has major partnerships with wireless
companies around the globe, including Verizon and AT&T Wireless.
argue that Go2Net is a better company than Infospace, due to the
wide variety of profit centers it has amassed, its access to Paul
Allen's vision and capital, and its various strategic investments
in emerging technologies and interactive tools.
never fully a portal, but it is certainly a healthy business perhaps
best likened to a holding company comprised of various thriving
businesses. As such, it offers a lot of value to an acquirer. The
fact that Infospace stock plunged on news of the deal may be an
indication that Go2Net is little-understood. Anyone who has watched
the Go2Net management team in action knows that they combine business
sense and a careful approach to strategy and acquisitions with the
all-important willingness to plunge into emerging business niches
with both feet.
synergies are being questioned by analysts, and probably rightly
so. Then again, many great companies such as Qualcomm, IBM, Motorola,
HP, and even Microsoft don't always find the synergies they're looking
for in every deal, but since size matters, there is something to
be said for owning a diversity of properties, many of which are
at the cutting edge of tomorrow's wired existence, and many of which
are becoming profit centers in the here and now.
this Go2Net's destiny?
One of the
most interesting things about this is that Go2Net had begun moving
more seriously into providing business services, like portal building.
Infospace is a major player in that arena, so it may actually be
less complicated for the merged company to provide a comprehensive
suite of solutions to companies building portals and information
hubs of all shapes and sizes.
thing to keep in mind is that in the very early days of Go2Net,
the two key founders may have been envisioning a company very much
like Infospace. Both companies have focused on similar themes, focusing
on the "guts" of online content delivery. Go2Net's flashier consumer
media properties have overshadowed that focus, but the founders
never strayed too far from that vision.
side effect of this merger is a name change for Go2Net, which had
ongoing branding confusion with Goto.com (pay for placement search
engine) and Go Network (Disney's portal).
consumers wanting to search Metacrawler or play games on their
wireless devices are going to have a lot easier time of it in the
Infospace to buy
Infospace takes Go2Net out of the shadows
Analyst: Go2Net Doesn't Care About Folding Its Brand
ON24 Audio and Video
Analyst: Go2Net Complements InfoSpace and Vice-Versa
ON24 Audio and Video
Two Portals Better Than One
Internet Stock Report
Fool Plate Special -- Is There Room at InfoSpace for
InfoSpace to acquire Go2Net in $4 billion merger
InfoSpace Digs Deep To Acquire Go2Net
articles about Go2Net
Building a Portal?
Go2Net Wants Your Business
Metacrawler Does Go2Net Proud
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