Infoseek drops after Go launch
The firm's shares fall as much as 16 percent following its meteoric rise yesterday, following the launch of Infoseek-Disney's Go Network.
Infoseek's shares skyrocketed nearly 60 percent yesterday, just before the launch of the much-anticipated Go Network, a joint Infoseek-Disney project whose strategy represents a sea change in the portal sector. The Go Network launched last night.
Infoseek shares were down 3.375 or 3.85 percent to 84.375 in midday trading, while partner Disney was up 2.0625 or 5.85 percent at 37.3125.
Disney stock rose about 23 percent in the past week and at least three analysts recently raised their ratings on the company.
"We have rising confidence in Disney's long-term outlook, especially as it relates to the company's Internet initiatives," said Salomon Smith Barney analyst Jill Krutick in a report. Krutick raised her rating to "buy" from "neutral" and said Disney stock can reach 42 per share in 12 months.
Infoseek closed yesterday up 32.625 points or 59.18 percent to 87.75, while its portal brethren also enjoyed huge run-ups. Yahoo hit a new high of 445 yesterday in anticipation of its earnings report, due today, then retreated to close at 414.5. The company's stock dropped today to 394.25 in early afternoon trading.
Other portals also came back down to Earth today. America Online was down 6.47 percent or 10.6875 points to 154.4375; Lycos was down 16.79 percent or 22 points to 109; and Excite was down 9.8125 or 11.72 percent to 73.9375.
Disney and Infoseek have been working on the Go Network since June, when Disney agreed to buy 43 percent of Infoseek in exchange for $70 million in cash and its majority stake in Web site designer Starwave.
Part of the Go Network's strategy is to offer "universal registration, personalization, and navigation" among all the sites in the network, Infoseek president and chief executive Harry Motro told attendees at a keynote address last week during the Consumer Electronics Show in Las Vegas. For example, a user can to register once--on ESPN.com, for example--and he or she won't have to do so again on ABCNews.com, or any of the Go Network's other properties, he said.
Another part of the network's strategy, which Motro dubbed "creeping personalization," allows users to personalize as much as they want to on any of the sites, with all the other sites on the network recognizing the user's choices.
The Go Network is part of a trend among Web properties, which are turning away from the portal strategy in favor of offering original content in a variety of areas. They also are beginning to offer much of the functionality that is popular on the portals, such as free email. The new breed of sites was dubbed "destination" sites at the trade show last week.
Still, some analysts are skeptical about the network's cost vs. its chances of success.
"The amount of money they'll have to spend to get to the level of [brand awareness] of Lycos or Yahoo is tremendous," said Ryan Jacob, portfolio manager of the Internet Fund, a New York-based mutual fund.
Bloomberg contributed to this report.