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THE DAY AHEAD: What&#039s Infoseek really worth?

How much is half of a has-been portal worth these days? That's what Wall Street is asking after Walt Disney Co. (NYSE: DIS) said it is in talks to acquire the rest of Infoseek Corp. that it doesn't already own. Infoseek (Nasdaq: SEEK) shareholders may not like the answer.

What's Infoseek worth to Disney?

Here's the news. Disney wants to buy the rest of Infoseek, 57 percent to be exact, and spin it off in a tracking stock with all of Disney's online properties lumped in. Now here's the refresher, Infoseek and Disney teamed up to create the Go Network about a year ago as a Yahoo! (Nasdaq: YHOO) challenger. Combine Infoseek's portal with Disney's media synergies and you have a contender -- at least in theory.

In practice, you have a "me too" portal that attracts a lot of users but can't turn the traffic into revenue (see last quarter.) And you also have a lot of "Visit, a part of the Go Network" during ESPN's SportsCenter.

Disney, which owns 43 percent of Infoseek at present, didn't pay a hefty premium the first time so why would it pay through the nose the second time around? Disney is already running the show now, but needs complete ownership to spin off an Internet unit. For the initial 43 percent stake in Infoseek, Disney paid $70 million in cash, Starwave, which was valued at about $350 million at the time, and $139 million in warrants to gain control of Infoseek after three years.

The measuring stick for portal deals is the $6.7 billion At Home (Nasdaq: ATHM) paid for Excite (Nasdaq: XCIT). Disney will never even come close to that figure.

The after-hours reaction to the Disney-Infoseek talks was positive, but in the end Infoseek shareholders may be disappointed. Infoseek has a market cap of about $2.6 billion and that's after Monday's 17 percent surge. Infoseek is also likely to see upside today, but the fair value for Infoseek is fuzzy. Let's assume an optimistic $4 billion for the whole company, including a premium. That means Disney forks out a little more than $2 billion or so for the 57 percent of Infoseek it doesn't own. The grand total for Infoseek is still less than $3 billion. That's still a deal for Disney.

That's the way it should be. Excite was worth a little more because it had MatchLogic as a direct marketing unit. With MatchLogic in the fold, Excite consistently had the highest revenue per user among the portals.

What are you buying with that 57 percent of Infoseek? Are you buying management? No. Disney is running according to every anecdotal chunk of evidence we've heard. The company is decidedly Disney already.

Yes, Jake Winebaum has left Disney's Buena Vista Internet Group to start eCompanies, an Internet incubator, but that doesn't mean Infoseek will have any more influence over Infoseek CEO Harry Motro is still trying to turn traffic into revenue.

Since Motro hasn't figured the traffic-to-revenue formula yet, Disney shouldn't have to pay a lot.

What is Infoseek's other half bringing to the table in terms of functionality? Not much. Infoseek has become just the search tool to get around on could ditch Infoseek and plug in an Inktomi (Nasdaq: INKT) search engine and no newbie would know the difference. Is Infoseek's search now worth more than the Starwave/Disney properties such as Probably not.

Of course, Disney has to buy Infoseek so it can actually own the company it controls anyway. It makes sense for a Disney-controlled entity to be owned by Disney. Slap the mouse ears on and make it fly. Disney-Infoseek surely learned a lot from the first attempt at and take two should be better.

With Infoseek in the fold, Disney can add its remaining Web sites and spin us a great tracking stock. Oh yeah. That brings us to the tracking stock issue.

Disney will control the entity and spin off a portion to the public. But with tracking stocks, investors don't have a lot of voting power and don't get the whole ownership enchilada. Disclosure: ZDNet is the Internet tracking stock of Ziff Davis.

Tracking stocks are popular these days so Disney would be foolish not to raise some cash that way. See DLJ Direct (NYSE: DIR) as a fine example of raising a lot of dough for a tracking stock.

But investors on message boards are already screaming, "I don't want to own Disney shares." Of course they don't. It makes a lot more sense to own half a portal that is losing tons of cash. SEEK is a pure Internet play.

What is Infoseek worth again?