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May 25, 2000                                                                        REPRINT

NetZero Plans to Acquire
Simpli in Cash, Stock Deal

By SHARON CLEARY
WSJ.COM

SAN FRANCISCO -- NetZero Inc. plans to announce Thursday that it agreed to acquire Web-search start-up Simpli.com Inc. in a stock and cash transaction valued at $23.5 million.

Under terms of the deal, NetZero will issue 2.5 million shares of its common stock to Simpli.com and $2.6 million in cash. Shares of NetZero closed Wednesday at $8.375, up 37.5 cents.

Simpli, Providence, R.I., will become a wholly owned subsidiary of NetZero. The acquisition is expected to be completed by the third quarter.

NetZero, which has signed up about four million users since the free-Internet provider's launch in October 1998, expects Simpli's associative-search software will improve its targeted marketing and be part of its e-commerce efforts. The technology will be used to personalize users' start pages and closely focus advertising based on users' search habits.

Simpli's software will be closely tied with NetZero's new CyberTarget division, which provides marketers and advertisers with online market research and measurement services.

"With Simpli.com's technology, we can personalize advertising and content in a way no one else is doing on the Net," said Marc Goldston, NetZero's chairman and chief executive. "Our goal is to have every message to our users be targeted to their habits, and this [acquisition] moves us way down the pike."

Simpli's software, dubbed SimpliFind, was created by a team of software engineers, linguists and cognitive theorists from Brown University and Massachusetts Institute of Technology.

Simpli was incorporated last spring and hasn't taken any venture capital to fund its development, relying solely on angel investors and board members' money -- meaning a bigger payoff for employees.

"We did it without taking one penny of venture-capital money -- and we're making everyone, including a lot of professors, very happy," said Chief Executive Jeff Stibel. Mr. Stibel, 26 years old, will stay on at NetZero following the acquisition.

SimpliFind is built on a lexicon called WordNet, which was developed over the past fifteen years by researchers at Princeton University. WordNet is an effort by linguists and cognitive theorists to build a relational dictionary that corresponds to the way language is understood by the human mind: via context and association. Simpli's search tool is a practical application of WordNet's associative capabilities.

 

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