US portals to storm Europe - study

New research says all but three European portals will fall before the likes of AOL and Yahoo!

All but the largest European portals are likely to be defeated by larger, more aggressive American rivals, according to a report by Forrester Research released Wednesday. The report puts no UK portals among the winners.

Only three European companies have reached a level at which they can continue to compete with top US portals such as America Online and Yahoo!: Spanish Telefonica's Terra Networks, France Telecom's Wanadoo and Deutsche Telekom's T-Online. The losers will likely be the next ten largest portals, including the UK's Freeserve (quote: FRE), World Online and CMGI-owned AltaVista.

"Only three of the dominant national portals backed by deep-pocketed telcos will triumph on a pan-European level," the report said.

Forrester said Freeserve is a likely target of acquisition, possibly by a larger European portal. While the UK portal continues to expand, its share price has sagged as parent Dixons has struggled to find a buyer. Freeserve was recently ousted from the FTSE 100 index after the decline in dot-com shares took its value below the top 100 on the market.

European markets such as France and Germany are moving toward the current situation in Britain, where the top three portals grab 14 percent of traffic -- nearly three times as much as the next ten portals combined -- and 39 percent of online advertising revenue. The top five players would be successful because of their early mover advantage, while their parent companies would help them grow internationally.

Reuters contributed to this report.

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