GeoCities Brand to Remain
“We anticipate maintaining GeoCities as a stand-alone, very, very strong brand. There’s a lot of brand equity in this company,” said Tim Koogle, chief executive officer of Yahoo!, who will head the merged company.
     The race to capture visitors to the Web has created a frenzied pace of consolidation among Internet businesses. Internet companies are using their high-flying stock prices as currency to snap up competitors.
     @Home, a provider of high-speed Internet access, reached agreement last week to buy Excite, one of Yahoo!’s biggest rivals, in a deal valued at $6.7 billion in stock at the time of the announcement.
     Meanwhile, America Online is fighting to protect its position as the top Internet access provider and Web destination. The Dulles, Va.-based company agreed last fall to buy Netscape Communications for about $4.2 billion.

Pressure for Independent Lycos
Today’s deal also puts pressure on Lycos, the fourth most-visited Web site, to find a partner in the fast-shrinking pool of independent search and directory services, known as portals.
     Yahoo!’s 52 percent premium for GeoCities underscores the stratospheric valuations of these tiny companies, most of which didn’t exist a few years ago.

Company Snapshots
Headquarters	Yahoo!: Santa Clara, Calif. Geocities: Marina del Rey, Calif.
Founded	Yahoo!: 1994 Geocities: 1994
Revenues in 1998	Yahoo!: $67.4 million Geocities: $4.6 million
Media Metrix ranking for December 1998	Yahoo: No. 2, 27 million unique visitors Geocities: No. 3, 19 million unique visitors

GeoCities, which hosts Web pages created by individuals, has slightly more than 290 employees. In the final three months of 1998, the Santa Monica, Calif.-based company lost $8.4 million, or 27 cents a share, on sales of $7.5 million, according to its financial results also released today.
     Yahoo!, a comprehensive Web site offering everything from news to free e-mail, has about 800 employees and earned $18.5 million on sales of $76.4 million in the latest quarter.

Market for Sites With Audience
“We are very comfortable with this premium,” Koogle said in an interview. “There is a competitive market for leading brands that have a very large audience.”
     Yahoo! already owns a roughly 4 percent stake in GeoCities and the two companies have worked together over the past year by offering some of each other’s services to customers. While Yahoo! has talked with other companies, negotiations with GeoCities grew serious this past week-and-a-half, Koogle said.
     Yahoo!, based in Santa Clara, Calif., hopes the combined company will save money on technology costs by using Yahoo!’s computers to handle some of GeoCities’ massive Web traffic and transactions such as online purchases.
     Unlike the At Home-Excite merger, which combines companies in different Internet fields, today’s marriage reflects Yahoo!’s unique strategy of focusing on its Web services. That frees Yahoo! to forge alliances with Internet access providers like Bell Atlantic Corp. and MCI WorldCom Inc.