CNET también está disponible en español.

Ir a español

Don't show this again

Tech Industry

Go2Net rises on &#039buy&#039 rating

Go2Net (Nasdaq: GNET) rose 9 percent Thursday after coverage was initiated by James Preissler of PaineWebber with a "buy" rating.

Despite Go2Net's financial and traffic peformance analysts have yet to cover the stock. Go2Net has risen through the ranks the hard way.

Shares were up 5 5/8 to 65 7/8 Thursday morning.

PaineWebber initiated coverage of GNET with a "buy" rating and a 12-18 month price target of about $96 per share. The stock has risen past the legions of Internet companies that put branding ahead of profits. Go2Net has quietly turned the whole Internet company stereotype upside down. Go2Net ranked 9th by Media Metrix's data, with 11.2 million unique visitors in July.

Go2Net has been around since 1996, and didn't have a flashy IPO. It hasn't gotten coverage from big firms who had no reason to cheer the stock up as they wouldn't profit from underwriting fees. Only five have been covering the stock. Go2Net got a solid cash infusion from Paul Allen, which helped it graduate into the big leagues.

About 40 percent of Go2Net's revenue is non-ad based, coming from recurring streams such as, according to Preissler's report. While growing its network, Go2Net has stayed profitable and has diversified revenue streams from advertising, e-commerce, subscriptions, and licensing. Advertising clients reached 358 during the June quarter, up from 142 advertisers for the comparable period of the previous year. Preissler predicts Go2Net's e-commerce revenues to continue to grow at a faster rate than advertising revenue and account for as much as 80% of revenue over the long term.

Go2Net's assets include branded sites in personal finance, search and directory, business services and e-commerce, personal start pages and games. Its search engine, MetaCrawler, is the top ranking metasearch service, and Go2Net recently strengthened its search services by buying the Dogpile metasearch service.

Paul Allen's Vulcan Ventures has taken a sizeable stake in Go2Net, and now owns about 34% for a total investment of $426 million. This gives the company a strategic relationship, and $300 million in cash to build its network for the broadband world.

Go2Net is expected to provide Paul Allen's Charter Communications, the fourth largest cable operator in the US with approximately 6.2 million subscribers, with broadband portal services.

Preissler predicts revenue of $21.2 million for the fiscal year 1999, and says the company could face increased competition from traditional media players such as Disney, NBC, and others as it expands.