Go2Net Gobbles Up FreeYellow.com

Go2Net (Nasdaq: GNET), the online network backed by Paul Allen’s Vulcan Ventures, announced today that it has acquired free Web site building and hosting service FreeYellow.com.

Go2Net will pay $19.5 million (US$) in cash and stock for FreeYellow.com, which reached more than 1.8 million unique users in September, according to Media Metrix. FreeYellow.com recently received accreditation from the Internet Corporation for Assigned Names and Numbers (ICANN) to provide top-level Web domain registration services.

John Molino, CEO and founder of FreeYellow.com, says that the deal with Go2Net “represents a significant opportunity for FreeYellow.com to play a role in the creation of one of the Internet’s largest aggregations of commerce-enabled merchants.”

FreeYellow.com Complements Small Business Services

The deal bolsters Go2Net’s small business services, which includes hosting services HyperMart and Virtual Avenue. Both of these services offer free hosting and e-commerce services for small to medium-sized business. Currently, HyperMart and Virtual Avenue host more than 560,000 businesses, with an average of more than 1,500 new business signing up each day.

Go2Net’s small business services also include Authorize.Net, which helps more than 47,000 online merchants manage transactions.

FreeYellow.com’s services will complement Go2Net’s small business services with its own site building and site promotion services. Like many of Go2Net’s small business services, FreeYellow.com’s offerings are free for users and subsidized by advertising.

“FreeYellow.com’s site-building technologies add an important element to the business services we provide, enabling our new small and medium-sized member businesses to easily build their own sites via the Go2Net Network,” said Russell C. Horowitz, CEO of Go2Net.

Stock Impact

Shares of Go2Net climbed 1-11/16 to 58-1/16 in early trading today after the news. The stock is well off its 52-week high of 99-1/2, but it remains one of the year’s top performers after trading as low as a split-adjusted 3-1/4 in the last 52 weeks.

The presence of Allen has increased investor interest in Go2Net because it is widely perceived that Allen is trying to turn Go2Net into a formidable portal presence. Go2Net’s other recent acquisitions include the Dogpile search engine and auction site Haggle Online.

The Go2Net Network also features search engine MetaCrawler, Web directory 100hot, financial community site Silicon Investor, gaming site PlaySite and online shopping mall WebMarket.

However, despite all these attractions, Go2Net dropped from number 9 to 12 in Media Metrix’s September list of the most-trafficked Web properties, falling from 11 million unique users to 9.8 million unique users. This drop was the most dramatic among the top properties, but sites such as Yahoo! and Lycos also saw their traffic fall significantly.

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