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$4.7 Billion Buys Yahoo Millions of Web Sites, Users

GeoCities will retain its name, but Yahoo is eager to have the technology.

By Rebecca Sykes, IDG News   

Yahoo will issue 0.3384 shares of its common stock for each share of GeoCities, and all outstanding GeoCities options will convert into Yahoo options, says Jeff Mallett, Yahoo's president and chief operating officer. Yahoo expects to take a one-time charge related to acquisition expenses in the second quarter of this year.

GeoCities' membership was what attracted Yahoo, Mallett says.

"The core component was the member base that they have built," Mallett says. But GeoCities' technology for back-end publishing and its personal publishing tools are also prizes, Mallett says. The merged firm will reach more than 58 percent of those who use the Internet at home and at work, he adds.

Analysts say the deal did not surprise them. It's the latest in the merger frenzy among Internet companies, ignited in part by @Home's purchase of Excite, says Scott Smith, director of Internet business strategy at Current Analysis.

"There's a need to consolidate to compete, because of the growing size of the players," Smith said. "It's just an effort to get bigger to become a stronger and stronger magnet for users."

Analysts say users will probably see little change, since Yahoo will want to retain GeoCities' loyal followers as well as its own customers.

"The GeoCities brand and dedicated service will continue [with] Yahoo GeoCities," Yahoo's Mallett confirms. GeoCities will retain its offices in Marina Del Rey, California.

But users will notice some differences, Mallett says. GeoCities' publishing tools and community content will go on top of existing Yahoo areas, and GeoCities will be able to expand to the 17 countries where Yahoo operates, say Mallett and Tom Evans, GeoCities president and CEO.

The agreement must pass federal regulatory scrutiny before completion, and is expected to be final in the second quarter of this year.