America Online acquisition of Netscape Communications late last month will give AOL exposure to many more business Web surfers, which ultimately should give AOL’s stock a boost.
One of the biggest gains for AOL in the US$4.2 billion deal is Netscape’s Netcenter, an Internet portal that’s tightly linked to Netscape’s browser. It gives business users an alternative to portal Web sites such as Yahoo.
Many Internet service companies are measured by the number of hits their Web sites get. Now that AOL has Netcenter -- which reportedly had 12 million business visitors in September alone -- AOL’s stock should reap the benefits.
“This is great move for AOL,” says Mark Cavallone, an analyst at S&P Equity Group in New York. “It is going to give [AOL] more of a presence in the daytime world, with business users.”
Others agree that AOL saw a great opportunity with Netcenter and grabbed it.
“Even though the majority of [Netscape’s] business was enterprise software, they were really growing the Netcenter portal business at a much more rapid rate. And it was becoming clear that was going to become the new emphasis of the company,” says Peggy Ledvina, an equity research analyst at Dain Rauscher Wessels in Minneapolis.
Making the deal even sweeter for AOL, Ledvina says, is that it will give AOL the largest audience reach and attract more advertisers to the Dulles, Virginia.-based company.
AOL isn’t expected to make any more acquisitions in the near future. The company will have plenty to do just absorbing and exploiting its latest deal.