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Shares of Marchex Inc. (NASDAQ: MCHX) dropped Friday to an almost three-year low after the company had posted its second-quarter results. Marchex shares fell about 20% to less than $9. Just hours before the company had announced the acquisition of pay-per-call company VoiceStar for $28 million.
This is an extremely undervalued stock, in my opinion. Marchex owns a great portfolio of more than 200,000 generic domains, including gems like Cuisine.com, VideoCamera.com, Beijing.com, and Debts.com. This portfolio alone is worth hundreds of millions of dollars and so far Marchex has not exhausted the potential of any of these domain names yet. Although the company certainly has excellent pay-per-click pages that are better than what you can get at any domain parking company, Marchex has not developed any of its domains. Marchex’s domains have a great commercial value and each of its domains has the potential to be built into a multi-million-dollar business within months. Imagine Marchex developing just one of its domains per year. The company could quickly become one of the biggest players on the Internet. Marchex would have online businesses each worth as much as Business.com (sold for $350 million in 2007) and CreditCards.com (sold for $130 million in 2006, now filing for IPO). The sky is the limit for generic .com domains of such high quality!
Marchex has been working on improving their domain parking pages in order to maximize the revenue of their overall portfolio, but I am sure that the company will decide to develop single domains into full online businesses in the near future. That will be the time when Marchex shares will soar.
Ron has published a new cover story at DNJournal.com, titled “Lift Off: How New Sales Platforms are Sending the Domain Aftermarket Into Orbit“.
As always, the article is extremely well-written and informative. Ron features some of the recently launched domain sales platforms and he explains why domain aftermarket sales have been skyrocketing in 2007.
The domain aftermarket is soaring. Of course, if you follow our weekly domain sales reports, you already know that but you may not know the reasons why it is happening and more importantly - you may not know how you as a domain owner can best take advantage of this explosion of interest in domain names.
At the New York T.R.A.F.F.I.C. conference in June I reported that we had seen a major jump in prices and transactions from the first quarter of this year to the second. The total dollar value of sales reported to us in the second quarter was up more than 50% from the dollar value reported in the first quarter and the average price of sales reported to us surged from $6,873 in the first quarter to $10,544 in the second. We track only four-figure and up sales, so averages for the entire market would be a good deal lower than those numbers as many smaller transactions occur. However, the numbers from our sample still show powerful upward momentum in the secondary sales market.
According to Andrew at Domain Name Wire, CreditCards.com has filed to raise up to $115 million in an IPO. The domain name CreditCards.com was sold for $2.75 million in 2005 and then built into a business and resold for more than $130 million in 2006.
This is a good example of a generic domain being developed into a valuable business in a short period of time. Generic domains are so valuable, because they receive targeted type-in traffic from the get-go and because they’re relatively easy to build an online business on. For instance, they’re often easier to brand than a domain consisting of a made-up term.
From Domain Name Wire:
CreditCards.com’s S-1 filing is a treasure trove of information about the company’s traffic (they actually have more than one domain driving traffic) and earnings per visitor. In the first half of this year, the company received 5.899M visitors and earned $4.64 per visitor.
(…)
In 2006, CreditCards.com had $43M in revenues and a net income of $18.4M. That net margin shows why a business based primarily on a domain name and search engine optimization, and which carries no inventory, is such an appealing investment opportunity.
Seattle-based Marchex (NASDAQ: MCHX) has acquired VoiceStar, a provider of call-based advertising services. The acquisition will further improve the thousands of local search portals Marchex runs on its domain names.
Marchex total anticipated investment to acquire VoiceStar will be $28 million, consisting of approximately $20 million in transaction consideration and $8 million in company investment.
(…)
“With the addition of VoiceStar, Marchex offers one of the most comprehensive online advertising platforms and agency services for local advertisers at scale in the industry. We can now offer local aggregators a private label search- and call-based marketing platform with distribution for their advertisements in search engines, vertical Web sites, and on our network of local Web sites,” said Peter Christothoulou, Marchex Chief Strategy Officer. “Additionally, we can now also add proprietary pay-per-phone-call advertising units to our network of local Web sites, which allows us to increase the direct monetization of our own properties.”
(via Press Release)
ICANN has a new Public Comment page at http://www.icann.org/public_comment/. Currently open discussions are, for example: ICANN geographical regions report, Changes to the Registrar Accreditation Agreement, and Independent review of Nominating Committee.
“This new webpage aims to provide a quick and simple entry point for people to read up and comment on ICANN’s ongoing processes, and thereby enhance and increase participation from the Internet community,” said Paul Levins, ICANN’s Executive Officer and Vice President, Corporate Affairs. “Like the recent launch of the ICANN Monthly Magazine, the page should also help people understand what issues are being discussed at ICANN, and how interested stakeholders can contribute.”
(via DomainNameNews.com & Press Release)
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