RealNetworks and Snap.Com Form Multimedia Powerhouse

One week after NBC merged its Internet properties, Xoom.com and Snap com., into a new company called NBC Internet, it announced Monday that Snap.com has joined forces with Seattle, Washington’s RealNetworks, Inc., to form a “multimedia powerhouse.”

Under the alliance, Snap.com — the 7th largest Internet portal — will become the exclusive Internet search engine used on the popular RealNetworks RealPlayer G2 software, as well as on all RealNetworks Web sites. In addition, RealNetworks’ RealGuide to multimedia content on the Internet will be integrated with a separate multimedia directory developed by Snap.com.

As part of the deal, the two companies will share generated revenue, after Snap.com pays RealNetworks an undisclosed fee. Tom Frank, senior vice president of RealNetworks, said the deal was not only one of the largest transactions the company has ever made — but also one destined to deliver “a much more enjoyable media experience.”

“Win-Win” Situation

Analysts say the deal helps both companies. RealNetworks should get more users being guided to its site by Snap.com’s engine, while Snap.com will have the opportunity to tap into RealNetworks’ 60 million registered users by focusing solely on audio, video and other multimedia content available on the Internet.

Merger-Mania Heats Up

This deal represents just one many partnerships formed this first half of 1999. Companies announced 10,411 transactions valued at $1.22 Trillion (US$) so far this year. This makes the first half the second-highest six months ever for mergers, alliances and acquisitions, according to Securities Data Co.

Two other interesting transactions were announced the beginning of this week: Xerox Corp., the world’s biggest copier maker, and software giant Microsoft are expected to announce an alliance this week that would have the companies jointly design new software enabling Xerox digital copiers to connect to computer networks running Microsoft software. It would also make it possible for Xerox to penetrate the corporate desktop printer market — currently dominated by Hewlett-Packard.

J.D. Edwards & Company, a huge enterprise software company, also announced it paid $80 million for privately held Numetrix Limited. The Toronto, Canada-based company makes software for business-to-business e-commerce. J.D. Edwards said it made the buy to beef up its e-commerce business — to offset sagging sales of its high-end enterprise programs. J.D. Edwards blames the slowdown on companies sandbagging funds for possible Y2K glitches.

Some analysts say merger-mania will heat up even more the second half of the year because of a proposed accounting change next year that could make some U.S. mergers more costly.

What do you think? Let’s talk about it.

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