CNET Takes Over Sumo
May 3, 1999 12:00 AM PT
CNET (Nasdaq: CNET), which runs a network of technology-oriented Web sites, expanded its business-related presence on Monday by purchasing Sumo, Inc., a leader in Internet service directories. Sumo's directories help corporations, small businesses and individuals find a variety of Web-related business services.
Sumo's directories include The Ultimate Web Host List, The Ultimate Web Design List, and The Ultimate Web ISP List. These sites are all featured on Sumo's InternetList.com site.
"Consumers of computing and technology products have a natural need for related services,'' said Halsey Minor, chairman and CEO of CNET. "We see an enormous opportunity to bring buyers and sellers of technology services together at CNET."
Deal Worth about $29 Million
Under the terms of the deal, CNET will buy 100 percent of Sumo in exchange for 230,000 shares of common stock. Shares of CNET were down 3-3/4 to 124-3/4 in early trading today. At that price, the deal would be worth nearly $29 million (US$). The transaction is expected to be a recorded as a pooling of interests.
CNET's new Web services directory will be modeled after its comparison shopping service, Shopper.com. The new services could prove to be a good fit for CNET's Builder.com, which offers a variety of resources for Web site developers.
CNET will continue to support and develop the Web Host Guild, a not-for-profit organization that sets industry standards to protect consumers. Sumo was a founding member of the WHG, which is billed as a "Better Business Bureau" of the Web hosting industry.
Market Poised for Major Growth
According to research firm IDC, corporate spending on Internet-related services will approach $80 billion by 2002, and account for nearly 40 percent of all Internet-related spending by businesses.
CNET looks to tap into revenues from both buyers and sellers of these services. In addition to offering users accesses to Internet services, CNET's purchase of Sumo will allow the company to attract advertising that are looking for a targeted, tech-savvy audience.
"Adding Sumo's valuable service listings will give convenience to our users and will provide our advertisers with an efficient way to market to them," Minor said.