THE WIRED INDEX
In stock markets, unlike nuclear physics, fission produces more energy than fusion. As often as not, breaking up a firm can be the key to unlocking pent-up riches (think AT&T).
Does that mean AOL, one of the MVPs of the Wired Index, was wrong to put Time Warner's cables and content in its shopping cart? And what's next for the Index's Net portals and media businesses?
After the merger was announced, TW head Gerald Levin explained why he was willing to take AOL stock in return for his company: "I believe in Internet valuations." But does Steve Case? When the deal was inked, America Online was worth roughly 150 times earnings. Only a moment earlier, though, its future was bleak without access to a broadband infrastructure. If we assume that, at this stage of its growth, AOL is worth only 90 times earnings, then Case got what he needed at a 40 percent discount.
Other portals were quick to downplay the deal's significance. Tim Koogle of WIRX company Yahoo! said you don't have to own content to be a powerful media channel. Excite's George Bell made similar noise. But most portals don't have the guts – or the capital – to stand by this belief. What if Case is right? What if a Web portal needs to provide not only context (AOL) but distribution and content (Time Warner) to prosper? Just the suspicion that America Online is on track is likely to drive the remaining portals and media giants into each other's arms before long.
Yahoo! will be the holdout. It's the only portal with a unique brand, real profits, and the power to control its own destiny.
– Phil Hood (phood@actnet.com)
INDEX PERFORMANCE (as of 1/31/00)
| Name| Since 11/30/95| Previous 12 Mos. | YTD
| Wired Index | +413.70 % | +46.48 % | -1.81 %
| Nasdaq Composite | +272.01 % | +57.24 % | -3.17 %
| Dow Jones Industrials | +115.60 % | +16.90 % | -4.84 %
The Wired Index tracks 40 public companies selected by editors ofWired to serve as a bellwether for the new economy. For a complete description and the latest results, seestocks.wired.com.
| NEW MONEY
| Swing Your Partner!
