Is Worth 400 Million Dollars?

I remember, back in the first web boom, when was on the market for $7.5 million dollars, I couldn't believe at how overvalued the domain name seemed to be. "Sure it's a great domain name," I thought, "but $7.5 million dollars? Come on."

Well, the seller at the time, Marc Ostrofsky, sagely decided to take a piece of the new web property as part of his negotiated sale price, along with a bunch of cash. How much of he know owns is undetermined. However, Mr. Ostrofsky must be glad that he took stock as well as cash, as is now for sale for $400 million dollars. The thing is, there are some major companies helping to facilitate this sale, which leads me to believe that it might actually go through somewhere close to this price. But the question is: is it worth it?

First off, you need to understand that there is an actual business here; it's not just the domain that is for sale. If the domain was for sale by itself, then I would have a hard time seeing anybody pay more than $10 million dollars for the domain. However, this web site is generating actual revenues (I have heard that the site has generated $50 million dollars in revenues and $15 million dollars in profits over the last calendar year.) When you use traditional valuation models, the $400 million purchase price doesn't seem so outlandish.

The question is: will the site actually be sold? I would say most definitely, however I would think that whoever buys the site will negotiate the purchase price down substantially. I would guess that the final sale price will settle in the $250 - $300 million dollar price range. Possible suitors? Google and Yahoo jump out at me as potential buyers.

In the end, it just goes to show you that the real estate boom is taking place online, and not in the real world. High quality .com domain names are constantly going up in price, with no end in site. Imagine a land grab, but a land grab in which every person and business in the WORLD is fighting for the same piece of land. What a great time to have a domain portfolio.

Filed under: Internet Companies

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