Re: UKNM: $10m for 50% of Excite UK sounds cheap

[Evan Rudowski]

Tom said:


>doesn't bode too well for the valuation of the remainder of Excite's

>european asset's mind... 


The point is only true if you assume that this was Excite's way of cashing

out . . . which it wasn't. This deal is not the end game; it's the starting

point. BT did not buy half of Excite UK -- Excite gets no cash from the

deal. What is happening is that Excite and BT are creating a new entity

with an initial value of $20 million. Excite contributes its existing UK

business -- already one of the best performing web businesses in the market

-- and BT's contributes to the entity $10 million in cash and ongoing

support. That is going to be one powerful entity. Its $20 million initial

valuation will only increase as the new business starts to perform. The end

game will be determined far in the future and is likely to be a significant

multiple of the inital $20 million valuation if we manage to do our jobs

even half right.


Replicate a similar model elsewhere in Europe and you will see

well-resourced Excite entities operating in each major market, with their

value increasing as they win a fair share of the growing Internet audiences

locally. Then tie them together into a network leveraging one another, as

well as Excite's U.S. capabilities, and it becomes a powerful scenario.


Best regards,


Evan Rudowski

Director, European Operations

Excite, Inc.

23 Kingly Court

London, W1R 5LE, England

+44 (0) 171 447 1802

evanrudexcitecorp [dot] com

 <<-- NOTE CHANGE


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