Eyeball to eyeball, Satyam fares poorly

Itcan be argued that these figures are not comparable because Yahoo and Lycos cater to an international audience while IndiaWorld and Rediff offer content to primarily an Indian diaspora.

But the argument is specious for two reasons. One, because IndiaWorld has been valued by international standards and the market buzz is that Rediff wants higher valuations when it goes to the markets with an IPO. And, two, both Yahoo and Lycos can tailor their content to suit the same audiences with minimal incremental costs and compete with India-born portals. To that extent, there are no local and international turfs.

Coming back to the point, the moot question is, what kind of money are the stock markets willing to pay for every 1,000 pages viewed? That is, the market capitalisation to 1,000 page views. Infoseek gets $52.67, Lycos is rewarded $103.17 and market leader Yahoo commands $208.71. As against this, IndiaWorld with its $115 million price tag, pocketed an astounding $255.56 – over five times that of Infoseek,more than twice that of Lycos and $47 over what Yahoo is valued at.

Assume for a moment this valuation is flawed and that it has to be based on revenue streams. The most apparent stream would be that which accrues from advertising and e-commerce.

Now consider this. The market for Internet advertising in India is currently estimated at Rs 6 crore. The company has publicly acknowledged Rs 1.27 crore as total revenues. Bear in mind that IndiaWorld’s main revenue stream was providing Internet-based solutions for corporate houses. Given the fact that e-commerce has not taken off in the Indian context and that whatever exists is insignificant, it can be safely discounted.

Therefore, once again, optimistically assuming that 20% of revenues was accounted for by advertising, it tots up to just about Rs 25 lakh per annum. After adjusting these numbers with comparable last quarter ad revenues for major portals, Yahoo leads the pack with $115 million and GoNet remains at the bottom of the heap with $4.32 million.IndiaWorld is nowhere in the same league at $15,630. Juxtapose these numbers with the page views and what emerges is an interesting set of numbers. Advertisers are willing to pay an a little over $4.13 for every thousand pages viewed with the possible exception of InfoSeek which gets $6.59 – possibly for the spending power of the audiences that it attracts. IndiaWorld, however, manages only 39 cents.Once again, the counter-argument here is very simple. That the advertiser is primarily Indian and quite obviously not willing to pay international rates for a medium he does not understand. Is there something more to IndiaWorld than what meets the eye?