Like the rest of the Internet world, the financial markets just don't know what to make of Infoseek and corporate parent Disney's portal plans. Apparently investors got skittish Friday when the company announced wider than expected losses and share prices dropped 11%. As ZD's Larry Dignan so cattily, but aptly put it: "It's not easy being an out-of-favor fourth place portal."
But the anaylsts quoted by The Wall Street Journal's Lisa Bransten were no less harsh. Bransten reported that Alan Braverman, an analyst at Deutsche Bank Securities, wrote in a research note: "We are beginning to see the Internet mature, and as a result the weaker companies are faltering while the leaders pull farther in front of the pack. In terms of revenue and page views, Infoseek lagged well behind its competitors." Braverman lowered his rating of the company to "hold" from "accumulate."
According to Bransten investors were less concerned about the cash haemorrhage than they were about the fact the Infoseek is accruing new users at a rate far below that of rivals Yahoo, Excite and Lycos. "While those companies are showing double-digit traffic growth in sequential quarters, Infoseek's average daily traffic increased just 5.4% in September from June," Bransten reported. "Traffic on the searching part of the site increased by 17%, but traffic on the chat pages was down 9%."
The problem seems to be that, although investors like the notion that a deep pocketed media conglomerate is backing Infoseek, they remain unclear what the overarching strategy is.
But ever the contrary, ZDnet's Dignan in another good column suggested that Infoseek may well be a good buy for investors. Mostly Dignan took Wall Street to task for driving down Infoseek's value because of losses while bidding up the value of money loser like Amazon.com. But that's a poor argument considering that Amazon is tops in its market while Infoseek is near the bottom.
More compelling is Dignan's take on Infoseek's traffic numbers. While Infoseek's traffic growth has slowed, he wrote, traffic at Disney's other properties -- ESPN.com and ABCNews.com -- jumped more than 40 percent sequentially. Eventually all those services will be rolled into the Go.com destination.