---
created_at: '2013-05-17T05:06:10.000Z'
title: Yahoo buys GeoCities (1999)
url: http://money.cnn.com/1999/01/28/technology/yahoo_a/
author: pain_perdu
points: 152
story_text: ''
comment_text: 
num_comments: 117
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created_at_i: 1368767170
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- author_pain_perdu
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---
[Source](http://money.cnn.com/1999/01/28/technology/yahoo_a/ "Permalink to Yahoo! buys GeoCities - Jan. 28, 1999")

# Yahoo! buys GeoCities - Jan. 28, 1999



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|  Yahoo! buys GeoCities   |  
| ![][7] |  January 28, 1999: 9:51 a.m. ET   

  
Internet portal to buy Web community site for $3.6B; consolidation continues    

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NEW YORK (CNNfn) - Internet search engine Yahoo! Inc. confirmed Thursday it will buy GeoCities, a fast-growing Web site community, in a $3.6 billion deal that will further solidify Yahoo!'s position as a frontrunner in the online popularity contest.   
     Under terms of the deal, expected to close in the second quarter, GeoCities shareholders will receive 0.3384 share of Yahoo! for each share of GeoCities they own. GeoCities has 31.4 million shares outstanding.   
     Based on Yahoo!'s closing stock price of $335.875 on Wednesday, the transaction is valued at roughly $3.57 billion, a hefty premium over GeoCities' market capitalization of $2.3 billion.   
     But that's not unusual in the fast-track Internet sector where multi-billion acquisitions have largely defined its growth -- @Home, for example, [agreed][8] last week to pay a 40 percent premium for [Excite][9] ([XCIT][10]).   
     Yahoo! said the acquisition will be accounted for as a pooling of interests and is subject to regulatory and shareholder approval.   
     As a result of the acquisition expenses, the company expects to record a one-time charge in the second fiscal quarter of 1999. The specific amount of that charge was not disclosed.   
     GeoCities (GCTY) is the third most visited site on the Web behind AOL and Yahoo!, with 19 million unique visitors in December, according to Web research company Media Metrix.   
     GeoCities sets up communities of people who share similar interests and allows customers to create their own home page on the Internet.  
     In a separate announcement, GeoCities posted a net loss of $8.4 million, or 27 cents a share, for the fourth quarter ended, compared with losses of $3 million, or 14 cents a share in the year-ago period.   
     Revenue for the three month period rose 341 percent to $7.5 million.   
     For the year, the company lost $19.8 million, or 71 cents per share, compared to a net loss of $8.9 million, or 44 cents a share, in 1997.   
     Yahoo!, the second most popular site behind America Online, has 28 million visitors a month, according to Media Metrix. A deal would likely propel Yahoo! to the top rated site in terms of traffic, but it's not clear how much the two sites' individual audience overlap.  
     Combined, the companies expect their home and office reach to exceed 58 percent, making it the second largest network of properties on the Web.   
     Through GeoCities, Yahoo! will be able to distribute a range of editing tools and content published through personal homepages in an array of services, such as Yahoo! Clubs, Yahoo! Classifieds, Yahoo! Shopping, Yahoo! Auctions, and other areas of the network.   
     Analysts say Yahoo!, like its competitors, is scrambling to maintain its dominance in the portal business.   
     The company already faces stiff competition from Excite, AltaVista and [Infoseek Corp.][11] ([SEEK][12]), the search engine turned Web portal that teamed with [Walt Disney Co.][13] ([DIS][14]) to launch GO Network.   
     And in November, America Online Inc. ([AOL][15]) [announced][16] a $4.2 billion acquisition of [Netscape Communications Inc.][17] ([NSCP][18]) America Online Inc.   
     Analysts expect more industry consolidation in the Web portal market, particularly with Internet companies hooking up with traditional media companies.  
     Analysts say the potential acquisition of GeoCities, or a company like it, is a must for Yahoo!.  
     "I really think it's the only strategy," says Scott Appleby, an analyst with ABN Amro, adding that the growth cycle of the Internet is still in its infancy.   
     "Customers and consumers are still building behavior patterns," he says. "Now is the time to build your network, now is the time to build your brand and AOL has proven that now is the time to build your business."   
     Appleby adds, too, that it's not too late for investors who missed the first wave of enthusiasm for Internet stocks, which have fast become the darling of Wall Street.   
     "We still believe that AOL is a great long-term buy," he says. "They are number one not only in subscribers but in revenues. We also like the financial services stocks, or the online brokers."   
     Appleby says penetration of the online trading business is still hovering at around 10 percent of the overall market, leaving lots of room for growth.   
     And lastly, Appleby says, ABN Amro still likes the community sites, such as GeoCities.   
     "We think they are good takeover material or fodder for those portals that are continually looking to build traffic," he says.   
     GeoCities shares closed at a new high of $75 on the Nasdaq market Wednesday, up $4. But the company's stock soared 35 to $110 in pre-market trading.   
     Yahoo! shares closed down $15.38 at $335.87 on the Nasdaq.![Back to top][19]  |  

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[Geocities, Be Free ink deal][20] \- Jan. 13, 1999  
  
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[Yahoo][21]  
  
[GeoCities][22]  
  
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