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100,000 Domains Sold for $164 Million

Posted by ryuzaki0 on from the a-lotta-bread-for-typos-these-days dept.

miller60 writes "Here's a news item that puts some hard data on the domain typo millionaires post from a couple weeks back. Marchex Inc. just paid $164 million to buy Name Development Ltd., an obscure company that displays pay-per-click keyword ads on 100,000 domains. It's not a stock swap, either, as $155 million of that was in cash. The seller reportedly built the portfolio by scarfing up expiring domains (including hardware-update.com, previously owned by Microsoft and linked from within the Windows 2000 OS) and replacing the content with pay-per-click ads."

3 of 287 comments (clear)

  1. Price not surprising at all. by bigtallmofo · · Score: 4, Informative

    Do a Google search for "web traffic" and look at all the AdWord advertisements. Almost all of them are sites that buy expired domain names or common misspellings of domain names, and for the low-low price of $2 they'll send thousands of people to your web site via such domains.

    Also, for anyone that has used the site... www.whatismyip.com was up for an EBay auction that ended at about 11:00 pm EST last night. Last I checked the bidding was $55,000. Not sure what it ultimately sold for.

    --
    I'm a big tall mofo.
  2. Re:So do all of these domains point to one subnet? by mjfrazer · · Score: 5, Informative
    careerinfo.com has address 83.138.187.18
    rentguide.com has address 83.138.187.18
    hardware-update.com has address 83.138.187.18

    So, i'd say yes...

  3. Something is bogus about Marchex by Animats · · Score: 3, Informative
    This is all very strange. Marchex is a small company. In their last reporting quarter, they made only $144,000 on revenue of about $12 million. Then, suddenly, despite their lousy track record, they did an IPO for $222 million and got onto the NASDAQ National Market System.

    With the revenue from this, they bought a collection of domain names of marginal value. It looks like they actually paid out only only $24.6 million on cash upfront for Name Development. And even that goes into escrow for 18 months. Name Development's income for 2004 was $4.6 million.

    Name Development seems to be one guy operating out of the Virgin Islands who sold click-throughs to Yahoo:

    • Name Development currently earns 100% of its revenue through the outsourcing of its pay-per-click listings to one major provider, Yahoo!

    Marchex is the target of spyware/adware litigation:

    • On February 3, 2005, we received notice of a purported class action complaint entitled Pagniello v. Cool Web Search, Enhance Interactive, Inc., Marchex, Inc., FindWhat.com Inc., Google Inc., Yahoo/Overture Search Engine Co., Microsmarts, LLC, STOPzilla, Inc., PC Tools Pty Ltd., eBlocs.com, and Network Dynamics Corporation, which was filed in the United States District Court for the Northern District of Georgia on January 24, 2005. The complaint alleges that the defendants have exploited web browsers and reconfigured his and others' computers by installing code on their computers without their approval or knowledge and seeks injunctive relief and damages. Based on our initial review of the complaint, we believe that we have meritorious defenses to these claims and intend to contest them vigorously. However, since the litigation is in a preliminary stage and any litigation is inherently uncertain, it is not feasible at this time to predict how this matter will proceed, what the ultimate outcome will be or whether an unfavorable outcome could have a material adverse impact on our business.

    I don't see how this adds up to a company with a market cap of $761 million. This looks more like a dud dot-com.