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An Investment Opinion

NBC's Internet Venture Debuts

By Richard McCaffery (TMF Gibson)
November 30, 1999

Don't feel bad if you're confused about NBC Internet Inc. (Nasdaq: NBCI), NBC's Internet company that started trading on the Nasdaq National market this morning around $75.

It's a kind of Frankenstein monster of the Internet and
traditional media, with more moving parts than the naked city.

Nevertheless, it's here, and for the first time investors can purchase shares directly in a company that bears the NBC brand name and logo. NBC, of course, is owned by industrial standout General Electric (NYSE: GE). NBC is NBCi's largest shareholder, with a 47.3% stake, while former shareholders own 38.8%, and CNET, which used to own Snap, has a 13.8% stake.

NBCi is the combination of Snap,,, NBC Interactive Neighborhood,, VideoSeeker, and a small equity stake of Don't log onto expecting a Web portal, however. NBCi is a media company formed by the aggregation of Internet, broadcast, cable television, and radio assets. It might be easier to think of it as a kind of holding company for all the different units.

For Web portal services, go to, NBCi's flagship product. Snap offers the normal assortment of search directory services, news, shopping, e-commerce, and community chat rooms. Snap's news link, for example, sends users to the MSNBC site. This is a typical example of how the company expects to leverage its many media offerings.

Creating a publicly traded company is NBC's effort to position itself as a "next generation" media company that can reach an audience through television, radio, the Internet, and other channels.

On a pro forma basis, NBCi had about 16 million unique visitors in July, making its family of sites the seventh most widely viewed sites on the Internet, according to Media Metrix. NBC, with its media might, could very well be a force to reckon with in this industry, but investors (in this Fool's opinion) should be skeptical about those numbers since it doesn't include overlap between similar properties like Xoom and Snap.

Most of the company's revenue stream comes from advertising, e-commerce, and outsourcing agreements, with the bulk coming from advertising. On a pro forma basis, NBCi would have had revenues of $34 million for the first six months of 1999, and a loss of $67.1 million.

The company has done a pretty good job explaining itself in SEC filings, with a user friendly question and answer section that covers Snap, Xoom, NBC's Internet assets, and the series of mergers that created NBCi.

Still, the main problem from an investor's point of view is making heads or tales of the new company with all the brand confusion. NBC may be able to better focus its Internet message now that it's combined its online assets and plans to promote Snap as its flagship site, but it's hard to imagine the company making serious headway against portals such as America Online (NYSE: AOL) and Yahoo! (Nasdaq: YHOO).
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