Jordan Rohan publishes this report: Download marchex.pdf which questions the amount of keyword to keyword arbitrage going on at Marchex.
It’s no secret that Marchex has one of the best pure-play domain name portfolios in the business and I have previously suggested that the "break-up value" of that portfolio would be many hundreds of millions if they were to peel the names off their deck individually and set conservative "buy it now" sales prices on them.
That said, many folks are apparently under the impression that Marchex’s revenue comes solely from those terrific domain names. Jordan’s report is the first time I have heard a financial analyst intimate that a significant tranche of MCHX revenue might be coming from buying and selling third-party traffic via arbitrage.
A very interesting read, this report is packed with data. It doesn’t change the burn-down value of Marchex’s name portfolio which is there, and solid IMO.
Marchex released this today:
http://www.marchex.com/press/20070604.html
Marchex is a nice value play becuase you are basically paying for the domains and getting the rest of the company for free. Most conglomerates, or companies with multiple product/revune lines are undervalued. Loew’s would be a great example of comapny that investors don’t know how to value because they can’t compare it to another company or industry. This is probably one of Marchex’s preoblems, explaining what they do in a few sentences that analysts can understand.
Hmm, and it just so happens that today Yahoo announced they will be introducing smart pricing. Not sure who Marchex uses, but I think the big 2 are very interested in traffic quality right now.