Today, CBS completed its acquisition of CNET networks for $1.8 Billion. The acquisition includes CNET.com, Download.com and CNET Reviews. According to Compete.com, these three destinations receive approximately 18 million monthly visitors. Trailing twelve month revenues for CNET is $408.24 Million. Entering these simple calculations (before costs) into the Bizak Calculator we get an EPV of $1.89 and a business valuation of $1.632 Billion. CNET was purchased for a 45% premium to its stock price but only 10% more than my revenue valuation.
Compare that to LinkedIn’s $1 Billion Valuation (Bizak Estimate = $399,999,984), Facebook’s $15 Billion Valuation (Bizak Estimate = $1,373,999,976), and YouTube’s $1.65 Billion acquisition (Bizak Estimate = $360 Million).
Obviously the new web applications are being valued at a significant premium to their revenue valuations. CNET, on the other hand, is a member of the original web (founded in 1992) and received a valuation in line with their revenues. However, back in the 1990s many internet companies also received speculative valuations based on a huge premium to their revenues – if they had revenues. Once a company has matured with proven revenues their valuation is more inline with industry standards – it’s the quest to find the next big thing that creates these premium (and speculative) valuations.
