Global media giant NBC agreed last week to combine several of its Net assets with online community and direct e-commerce firm Xoom.com, San Francisco. Reports have put the value of the new entity, to be called NBCi, at $3.9 billion based on Xoom's market value.
NBCi will include Snap.com, a portal owned by NBC and media company CNet Inc., bringing together broadcast, portal and e-commerce for more than 18 million monthly users. NBC will own slightly less than half the venture.
In contrast to the reception it gave Lycos-USA Networks' merger plans, Wall Street liked the NBCi deal. Xoom shares were trading in the range of 79 to 80 last week after closing at 75 the previous week.
Perhaps ironically in light of the Lycos-USA Networks merger collapse, Xoom's business model is still unproved. The company offers Netizens free homepage-building resources, chat rooms, message boards, e-mail and other online services, and then targets those community members — who number 7.5 million — with product offers that match their interests. But the company has never made a profit.
“Wall Street is talking out of both sides of its mouth, and I think that could be very dangerous because there were some really great e-commerce synergies for the USA Networks-Lycos deal,” said Melissa Bane, director of Internet market strategy at the Yankee Group, Boston. “These inflated stock prices of many of these Internet companies supposedly take into account their future potential. Now, if we're looking at it that way, we should be looking at a deal like USA Networks and Lycos the same way.”