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News > Companies
Is Yahoo! done shopping?
April 1, 1999: 3:30 p.m. ET

Yahoo!, fresh of billion-dollar acquisitions, may have just begun to buy
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NEW YORK (CNNfn) - For Yahoo!, the buying blitz has just begun.
     After two big acquisitions this year, the leading Internet portal, with its high stock price and hefty market capitalization, has hardly run out of purchasing power.
     And this financial heft, coupled with a consolidation trend in the industry, means Yahoo! (YHOO) will be on the prowl for more acquisitions.
     "There's definitely going to be consolidation in the industry," said Bruce Smith, equity analyst at Jefferies & Company Inc. "And Yahoo's definitely going to be a player in that."
     The company Thursday snapped up Broadcast.com (BCST), an Internet audio and video broadcaster, for $5.7 billion in stock. This comes after Yahoo! in January agreed to pay stock now worth $3.7 billion for Geocities, a service that allows 3 million people to run home pages online.
    
Financial heavyweight

     Yahoo!, which has added to its popular collection of Web services internally as well, may be most renowned for its dizzying stock performance. Shares in the Sunnyvale, Calif.-based company gained 589 percent in the last 52 weeks, making its $34 billion market capitalization larger than that of Fortune 500 titans Merrill Lynch (MER) and Texaco (TX).
     While Jeffries & Company's Smith declined to speculate on Yahoo!'s next acquisition, he said another move appears certain.
     "They've got the currency, they've got the name recognition," he said.
     Name recognition has emerged as a key to Web success as Yahoo! and high-profile companies like Amazon.com (AMZN) and America Online (AOL) just keep growing.
     AOL recently completed a $10.2 billion deal with Netscape (NSCP), the largest in Internet history. Amazon, one of the Internet's leading retailer's, this week started an online auction service in a bid to grab some of the lucrative business from Ebay (EBAY).
     In January, cable Internet service provider @Home Corp. agreed to buy Excite Inc (XCIT) in a deal then valued at $6.7 billion and now worth about $5.5 billion. Internet portal Lycos (LCOS), meanwhile, wants to team up with USA Networks (USAI), a diverse media and electronic commerce company.
     Against this backdrop, the next questions for Yahoo! may be who to buy, and for how much.
     In the meantime, Daniel King, an analyst who follows the company for LaSalle St. Securities, says Yahoo! will likely digest its recent acquisitions.
     "I would be surprised if they did much more until the second half of the year," he said.
     But King said Yahoo! management expects to make acquisitions before year's end.
     With Yahoo!'s size, spending 1 to 2 million shares "is nothing for them," King said. Back to top

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