What the heck is GO.com? It seems like the company itself has a hard time answering that question. As confused as Mickey in Minnie's dress and bow, GO first fashioned itself as an Internet portal. This year it says it wants to be a content company. All the while, GO shareholders have been watching their money float away like Mary Poppins and her umbrella. GO.com? More like GoNowhere.com, if you ask me.
Let's assume first that GO is an Internet portal. That's what the company originally started out as and still, in many ways, functions as. GO was born from the marriage of Disney and Infoseek (and the eventual swallowing of Infoseek by Disney), but GO has never been a first mover in this space. It's always been a step (or two or ten, I'd argue) behind that god of all Internet portals, Rule Maker holding Yahoo!.
An important aspect to investing is the proper allocation of the investor's resources. In English, you should strive to have your money invested at all times in the best possible companies out there. You want to own an Internet portal? Fantastic! There are a couple to choose from. Oh, you say you want to own the best Internet portal? Then only one springs to mind, and get this -- it's actually making a profit! Novel idea, I know. Why GO when you can Yahoo!?
GO isn't just an Internet portal anymore, though. The company is "repositioning" itself to be a leader in the Internet entertainment content arena. To make that point even clearer, it sold off its Ultraseek unit to Inktomi <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INKT)") else Response.Write("(Nasdaq: INKT)") end if %> earlier this year.
It owns some great websites, like ESPN.com and (rebel yell, y'all!) NASCAR.com, not to mention Disney.com and all the childlike joys that go along with that. And, ohhh, let's not forget about that fad-du-jour, Who Wants to Be a Millionaire. Regis and company push traffic to GO through ABC.com. Surely these great properties will make GO all that it wants to be and more, right? Right?
Um, I don't think so. While there are certainly some great brands in that line-up, can GO really make it as just a content play? To quote a writer probably more in tune with these things than myself, "Content is not king." Yep, Rick, I'm sure you remember writing that Rule Breaker column back in March. You used Yahoo! and Lycos as two examples of portals that have gotten it right -- that is, have focused on community as well as content. About GO, you said, "The latter of the three has lined up some amazing content. Guess which one is not profitable? GO ahead. Guess."
I don't have to guess. I know. GO lost more money in its fiscal 1999 than it did in its fiscal 1998. The first two quarters of its current fiscal year have seen losses widening compared to last year, too. I agree with you, Rick. Content is not king. I couldn't have said it better myself.
The question now is how GO will ever become profitable. Company executives are decidedly mum on the topic. To quote Michael Learmonth from TheStandard.com, "�unless Disney is planning a pornography play, there is still little money to be made providing entertainment to desktops." There are about a gazillion jokes I could make right there, but this is a PG-13 show, so I'll let it lie.
The point remains, though, that GO is in a big ugly hole and digging itself out isn't going to be easy. Yahoo! CFO Gary Valenzuela once said, "This model can generate a lot of cash." It sure can, but only when you are one of the first movers and have a clear vision of what it is you want to be as a company. GO has neither of these advantages.
How GO plans to make money remains to be seen. We'll just have to wait and see. I'd plan on waiting quite a while, though. If GO's management wasn't savvy enough to notice that the logo they'd chosen looked remarkably like one of their competitors, I wouldn't expect greatness any time soon. (Meanwhile, GO has to pay $21.5 million to GoTo.com for trademark infringement, because of its use of a "green light" for its logo.)
To recap, if you want to own an Internet portal company, then at least own a good one. You can own the leader by choosing Yahoo! over GO. It's a no-brainer. If you want a content company, then choose carefully, because as you say, Rick, "Content is not king." Think about looking at GO's parent company, Disney. It's the same content after all, if you're into that sort of thing.
Most of all, ask yourself if your hard-earned dollars are being allocated to the best possible place. Do you want to get behind a company that has identity issues? A company that was not a first mover? A company with ever-widening losses? A company with no vision? With GO, the answer's "No." Don't do it. Stop, Fool, don't GO.
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