AP Online
09-13-2000
Inktomi Buys Internet Broadcast Co.
SAN FRANCISCO (AP) -- Inktomi Corp. is adding to its toolbox of technology that powers some of the Internet's most popular sites with its planned $1.3 billion purchase of online broadcasting company FastForward Networks.
Inktomi believes the Web broadcasting technology developed by privately held FastForward will give it a leg up in the race to deliver the type of live high-quality video and audio that will attract more traffic to Web sites and ultimately generate more revenue.
``We felt it would take 20 to 30 of our scientists two years to develop what FastForward already has,'' Inktomi chief executive David Peterschmidt said during a conference call with analysts. The San Francisco-based FastForward ``has a significant first-mover advantage here.''
Analysts applauded the deal, announced Wednesday.
``It's a highly strategic, pretty exciting move,'' said Lehman Brothers analyst Michael Stanek. ``If you lose in this battleground, you are in huge trouble.''
Foster City-based Inktomi will pay for the acquisition with 11.9 million shares of stock. Inktomi's shares fell $2.19 to $108.813 in trading Wednesday on the Nasdaq Stock Market.
The acquisition continues Inktomi's evolution from one of the Internet's pioneering search engine companies to a diversified networking business. Besides providing search engines, Inktomi also supplies online traffic management tools that speed the content delivery over the Web. Inktomi's customers include America Online and ExciteAtHome.
As the online pipes delivering data through the Internet are widened, analysts expect the online broadcasting market to grow rapidly. By some analysts estimates, the market for live Internet broadcasts could soar from virtually nothing today to $40 billion in 2003.
Inktomi believes FastForward will add $35 million to $40 million in revenue in 2001. Inktomi earned $4.5 million on revenue of $61.5 million in the quarter ended June 30.
Internet broadcasts so far largely have been unsuccessful. One of the most ballyhooed disappointments came last year when Victoria's Secret promised a live online broadcast of a fashion show, but the transmission crashed when too many people tried to watch.
FastForward's technology is supposed to avoid those kinds of crippling bottlenecks. FastForward most recently provided a live online video and audio feed of a college football game between the University of Nebraska and San Jose State University during Labor Day weekend without any major hitches.
FastForward CEO Abhay Parekh declined to say how many people watched the football game on the Web, but said the broadcast received high marks.
Digital Island and The Real Broadcast Network have been FastForward's biggest customers so far. Besides helping to deliver the broadcast, FastForward's technology also enables Web sites to measure the audience size -- a key factor for calculating advertising and subscription rates down the line.
FastForward, formed in 1998, has 75 employees, all of whom will be asked to join Inktomi after the deal closes later this year. Inktomi, formed in 1996, has more than 1,000 employees.
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