Technology news publisher Cnet Inc. yesterday gobbled up the Web's leading comparison-shopping service, MySimon.com, in a $708 million deal that shows media companies continuing to seek their share of the e-commerce pie.
The Cnet name has come to stand for technology information on the Web, where it runs the most heavily visited computer information site. The company announced that in addition to buying MySimon.com--a software agent that compares online prices--it is also changing its name to Cnet Networks Inc. as part of an effort to expand beyond technology news.
"We think commerce is a massive opportunity on the Web," said Halsey M. Minor, chairman and chief executive of Cnet. "What we have seen over the last six months is an explosion of new commerce categories emerging on the Web--things like dog food, diamonds and beauty products. We believe there needs to be one place people can come and find any product day or night on the Web."
Minor said its own Web sites, Cnet.com and News.com, were too well known for their technology focus to be able to morph into one-stop shopping services for all product categories. So Cnet surveyed the fast-growing online shopping services and struck a deal with the one that had the highest traffic and growth during the holiday season.
Cnet agreed to swap about 11.3 million shares of Cnet stock for the privately held MySimon.com. Cnet stock closed down 50 cents a share yesterday, at $62.18 3/4.
MySimon was one of the better known of the dozens of Web sites that have sprung up in recent years to let people type in the name of a product and compare prices at many different Web sites. MySimon's shopping bot--or software robot--searches 2,006 online merchants and covers hundreds of millions of products.
In December, the site drew 1.96 million visitors. On average, each spent 8.4 minutes looking at its pages, according to Media Metrix Inc., which operates a Web audience measurement service.
Cnet's technology news site already has a comparison shopping service for computer products, and it has a variety of editorial and user reviews for each product as well as price comparisons. Minor said Cnet plans to add its editorial expertise to MySimon, which until now has focused mainly on price.
Both MySimon.com and Cnet's computer shopping service make money the same way--through a mix of advertising on its pages and a "lead generation" fee it charges merchants when it sends them visitors.
Minor said MySimon, while collecting a modest revenue of $2 million last year and projecting $15 million this year, is growing at a faster clip than Cnet's rate of slightly more than 100 percent annually. He said the acquisition shouldn't significantly change analysts projections of earnings this year for Cnet.
While many companies are trying to develop comparison-shopping services online, including the large portals such as AltaVista and Microsoft's MSN, Minor said he believes media companies are better positioned to maintain the editorial integrity and independence of sites that advise shoppers on what to buy.
Cnet has been in a buying mood in recent months. Before Christmas, it spent about $20 million in cash and stock to buy Nordby International Inc., which provides custom financial data, and $50 million to acquire GDT SA, a Swiss company that provides computer product information that will be folded into Cnet's and MySimon's shopping guides.