IACI to purchase ASKJ, plus news/analysis in brief

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Includes: AABA, AMTD, ASKJ, CNIC, GOOG, GSIC, IAC, MSFT, MWW, NFLX, SHOP-OLD, UBET
by: David Jackson

  • Barry Diller is close to announcing IAC's (ticker: IACI) purchase of search company Ask Jeeves (ticker: ASKJ) for about $2 billion in stock, according to the WSJ. Comment: In theory this makes sense for three reasons: (1) Ask Jeeves would help IAC's companies, particularly Expedia and Match.com, reduce their financial exposure to PPC ads from external search companies. (2) IAC could integrate search throughout its e-commerce properties (think Amazon and A9). (3) IAC's strength in local commerce (destination-based services for travel, TicketMaster and CitySearch) could help AskJeeves' local search development. But in practice it's unclear whether IAC can realize the synergies that would justify the deal. Question: Does this put shopping search company Shopping.com (SHOP-OLD) in play? Or does SHOP's reliance on purchased traffic from general search engines make it unattractive?
  • Yahoo has acquired photo-sharing site Flikr, according to the WSJ, for an undisclosed sum. Yahoo just announced Yahoo! 360, an integrated suite of personal publishing and communication tools.
  • Legg Mason downgraded GSI Commerce (ticker: GSIC). Then GSIC reaffirmed its guidance for Q1. Question: Some sort of game going on here?
  • The Long Tail gets longer: Technorati's Dave Sifry reported that blog posting volume has doubled in the past 9 months. Comment: (1) Expect that to accelerate as Yahoo launches Yahoo! 360, its own blogging/social networking service. (2) Most investors in publicly-traded media companies (including online media) haven't started to think about the competitive impact of the Long Tail.
  • Nielsen-NetRatings released stats for the top 10 online advertisers ranked by ad page impressions. Publicly-traded companies that appear in the list: Netflix (ticker: NFLX) is number 2, Ameritrade (ticker: AMTD) number 5, United Online (ticker: UNTD) number 6, Monster Worldwide (ticker: MNST) number 7, and IAC (ticker: IACI) number 8. James Enck provides the full list. Comment: Reliance on online advertising is a weakness, as PPC ad prices are rising.
  • News that MSN quietly launched the beta version of its new shopping search site a month ago hit the mainstream media,
    with a Friday banner-headline from MarketWatch announcing "MSN Testing Froogle Competitor". You can read the February 22nd coverage from The Internet Stock Blog here.
  • Michelle Leder of Footnoted.org notes that online betting company YouBet.com (ticker: UBET) disclosed an agreement to pay its Vice Chairman David Marshall $275,000 annually for consulting. The terms of the agreement should be of concern to UBET shareholders.
  • Movie rental chain Blockbuster is suffering from poor availability of new releases, according to Home Media Retailing (via The Media Stock Blog). Until it rolled out its "no late fees" campaign as part of its strategy to combat the growth of online competitor Netflix (ticker: NFLX), Blockbuster guaranteed that newly released movies would always be in stock. But now that customers can bring back movies late without incurring a late fee, they are holding movies for longer and Blockbuster has withdrawn its "always in stock" guarantee. Home Media Retailing claims the lack of availability of popular movies at Blockbuster stores is so bad that competing movie rental stores are winning customers. Comment: If that's true, it's certainly good for Netflix too.
  • Mama.com (ticker: MAMA) hired a new auditor and reconfirmed that it would be filing its financial statements late. Comment: switching auditors is never a good sign.

Full disclosure: at the time of writing I'm long SHOP.