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Freeserve price tag questioned

Dixons values its ISP above Yahoo! - can this be right?

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Yet more speculation is doing the rounds over how much Freeserve is really worth. This time it comes from Broadview, IT mergers and acquisitions specialists. It reckons that based on value per subscriber and revenue the £1.3-£1.5 billion valuation put about by many sources, including Dixons, could be flawed. In today's Financial Times, Victor Basts, Broadview's MD said: "Because the free ISP model is moving inevitably to a portal/content provider model, Freeserve must be compared with public companies with these characteristics." With 1.32 million active users claimed by Freeserve, its current valuation works out at about $1500 per head. By comparison, Yahoo is worth $1140 per head. Broadview also points out that the company's revenues are much lower than similarly valued companies. AOL has annual revenues of about $4 billion, Yahoo brings in around $300 million and Freeserve has a much smaller £2.7 million. He went on: "A comparison with the 'universe' of net portals and network companies which are publicly traded shows that Freeserve is being valued above all US companies except AOL." He concluded that for the Freeserve valuation to have any validity, the company needed to reposition itself as a portal. He argued that all free ISP's will need to become portals to attract and keep users. Repositioning would involve investment and acquisitions of companies with features that will attract business, he said. ®

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