NBCi shares gain as new site debuts

As previously reported, the new site folds NBCi's Web holdings, such as community site Xoom.com and search engine Snap, into a single branded site. The NBCi home page contains typical features such as a search engine and links to news, weather and financial information. The site also heavily showcases content from other NBC TV properties, such as MSNBC and CNBC.

Shares of NBCi rose today with the relaunch, although the stock remains closer to its 52-week low of $6.12 than its 52-week high of $106.12. The stock jumped $1.44, or 23 percent, to $7.63 by the 1 p.m. PT close of regular trading. Earlier, shares had hit $9.

The move is the latest effort by a TV broadcast network to retool its Web strategy after bruising its nose on the Internet. Competition as a general interest Web portal has been fierce. Market and traffic leaders Yahoo, MSN and America Online have quickly outpaced their competitors and have forced them to change their strategies.

Web portal competitors, especially media companies, have encountered a mine field when stepping onto the Web. Walt Disney's Go.com recently launched a new version of its site to focus on entertainment and leisure. AltaVista has retreated to a search focus, while sites such as Excite@Home and Lycos have sold out to suitors.

NBCi chief executive Will Lansing said the company remains fully in competition with the top dogs of the business.

"We are in competition against Yahoo and AOL," Lansing said. "It's a big market, and there's room for a number of players at the top."

Whether NBCi can maintain a competitive stance against the portal leaders remains to be seen. So far, the company's journey has taken many twists and turns. In June, the company warned that its revenues would not meet Wall Street's expectations, citing a slowdown in advertising sales. In conjunction with that warning, the company said it would fold Snap and Xoom under the NBCi brand.

Then in August, the company laid off 170 employees, or 20 percent of its staff, as a result of the restructuring. Meanwhile, the company's traffic has slipped over the past few months. According to Media Metrix, NBCi was the 12th most-visited Web site last month, compared to its 7th ranking in February this year.

"They used to be No. 6 to 8, but they're not going to get that much higher on rankings," said Kathleen Heaney, an analyst for Bluestone Capital. "You can't knock off Yahoo or AOL."

As the company continues to search for its identity in the online world, it is falling back on the safety blanket of NBC and its other cable channels. Although NBCi's Lansing says the new site continues to offer a diverse array of content, analysts say that giving NBC-owned content preferential exposure may cause a backlash.

"If you see the new (TV) advertisements, it's not clear whether the new Web site is the source for NBC content or if it's a general portal," said Catherine Skelly, an analyst at Gruntal & Co. "That's a confused message."

Questions over future revenue growth also have been raised. According to NBCi's Lansing, 90 percent of the company's advertisers are from other Internet companies. From Wall Street's perspective, that could raise warning bells given the overall concern over advertising as a strong revenue source and the drying of ad spending from cash-strapped Internet companies.

Despite the concerns, Lansing said the company will begin shifting its attention to offline advertisers by teaming with the sales force from the TV side. The combined teams will sell offline and online ad packages, which will give the site more traditional advertisers within 12 to 18 months, according to Lansing.

NBCi also unveiled today a plan to offer free Internet access to all Montgomery Ward customers. The customized NBCi.com site will feature some of the department store chain's products as well as news from MSNBC and CNBC, a company representative said.

CNET Networks, publisher of News.com, owns a 12.7 percent stake in NBCi.

Bloomberg News contributed to this report.