To Invest or Divest? Oh, the Whims of Media Moguls
It seems that the folks with the deep pockets never knew what to think of these big Internet portal plays. They overinvest, they underinvest, they shun, they embrace, all for reasons known only to themselves and their accountants.
Spanish telecom Telefonica, already a large shareholder in Terra Lycos, has bid $2 billion in cash to acquire the 62 per cent of the company it doesn't own, while AOL Time Warner was rumored to be considering spinning off the AOL unit it famously overpaid for (although it denies this).
Large media companies seem to have long term strategies that transcend mere earthly concerns like profit and loss in the short term. Thus there is always more to these mega-deals than meets the eye.
Elsewhere, in search engine news, Ask Jeeves shares jumped on the recommendations of analysts today. At the close, Jeeves announced it was raising $100 million in a debt offering to be used for "general corporate purposes." Ahh, the old run-up-to-a-financing trick. Yes indeed, there is always more to these things than meets the eye. Be careful out there, kids.
Finally, Jeeves is off the B2B bandwagon and back on the B2C train full bore. It just sold off its enterprise division for all of $4.25 million, which indicates that a large part of what they told reporters (like yours truly) about that division was exaggerated hogwash. Never believe what you read in the papers, kids.
Posted by Andrew Goodman
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