Exciting news for Excite
Shares of Excite Inc. on Wednesday rose $3.25 a share to $26.75 while competing Internet guide companies slid back following recent gains.
Investors jumped all over Yahoo Inc. and Lycos Inc., two of Excite's chief competitors, on Tuesday sending Yahoo up $2.94 per share and Lycos up $6.63 per share. For Lycos, Tuesday's move pushed its stock to a 52-week high.
But things were much different Wednesday as Yahoo fell $2.25 per share and Lycos slid back $2.75 a share.
Analysts said many investors who wanted to add an Internet guide stock to their portfolios chose Excite because of its relatively low valuation.
"Before today's trading, Excite was trading at less than four-times its estimated revenues for 1998," said Andrea Williams, an analyst at Volpe Brown Whelan & Co. "Lycos, after yesterday's run, was trading at 10-times its estimated earnings and Yahoo was trading at 21-times higher."
After meeting with Excite officials Tuesday, Volpe Brown Whelan & Co. reiterated the stock's "strong buy" rating.
Of the three largest online guide companies, only Yahoo has managed to turn a profit.
"I think a lot of investors who might have missed out on Yahoo or Lycos decided that Excite was an opportunity that didn't have as much risk at this point as the others," Williams said.
While the online industry as a whole is quite young, analysts said the maturing of online commerce and the partnerships Yahoo, Excite and Lycos have forged with more established companies has given the market credibility.
In June, Intuit Inc. paid $39 million for 19 percent of Excite's common stock. The deal made Intuit the exclusive provider and aggregator of financial content on all of Excite's online services. Excite, in turn, became the exclusive search and navigation services featured in the U.S. versions of Intuit's popular Quicken, QuickBooks and TurboTax software programs.
Amazon.com, the largest online bookseller, in July placed a multimillion-dollar advertising buy with Excite to lure potential customers to its site.
"People are starting to see the quality of these partnerships and the amounts of money companies are paying to work with these companies," Williams said. "Investors, especially institutional investors, are starting to get very interested and understand these companies stories a lot better than they did six or eight months ago."