Cnet Spins A Wider Web

New CEO Bonnie is looking far beyond tech publishing

Don't expect fireworks from the changing of the guard at tech publisher CNET Networks Inc. After all, new Chief Executive Officer Shelby W. Bonnie has worked side by side with his predecessor, Halsey M. Minor, since six months after Minor started CNET in 1992. The two men, both 35, attended University of Virginia, have adjoining offices at CNET's hip San Francisco headquarters, and live a few blocks apart in the city's tony Sea Cliff district.

That's not to say they're peas in a pod. Minor is a visionary, the passionate entrepreneur who led CNET from rocky startup to its current success as one of the 15 most visited Web sites, with a market capitalization of more than $4.4 billion. Bonnie is the cool-headed operations type, with a nose for numbers, and deft people skills. A former director at investment firm Tiger Management LLC, he has long spearheaded CNET's dealmaking, and served as its chief financial officer from 1993 to 1997.

Those skills will be in hot demand as CNET enters its critical next phase. Investors nervous about the transition have driven CNET's stock down 21%, to about 54, since Minor stepped aside, but fundamentals are still strong. With 1999 revenues of $112 million, up 95%, the company has carved out a lucrative niche in publishing news and product reviews about computers and technology on the Web. And it keeps scoring new coups. In January, for instance, it announced a first-ever content-sharing pact with the Associated Press and the launch of an all-technology radio channel with broadcasting giant AMFM Inc.

Such deals owe their success in part to a risky bet made by Minor, who stays on as chairman. CNET announced last July a controversial plan to drive itself into the red by spending $100 million on advertising. The scheme seems to be working: Researcher Nielsen/NetRatings says the number of unique visitors on CNET's sites shot up 56% from July to January, helping to more than double second-half revenues.

Now, Bonnie needs to make that success pay off. He's beefing up CNET's international presence, branching into new subjects such as consumer electronics, and moving to deliver content on non-PC devices such as wireless phones. "We believe content drives e-commerce," he says. Such initiatives should help pump up revenues 65% this year, to $185 million, and boost profits to $24 million vs. last year's $44 million loss.

GOING PORTAL. But the new CEO's biggest moves are into far less familiar markets. He's expanding CNET's definition of content to include data services, selling businesses information mined from its rich trove of product and market data. Last July, for instance, the company paid $50 million for Swiss startup GDT, which had created a massive database of computer-product specifications. CNET formed a new data-services unit to hawk GDT's software. Three dozen customers, from distribution giant Ingram Micro to e-tailer, have already signed up. Bonnie figures data services could plump up CNET's top line by $10 million in 2000. In later years, predicts analyst Matthew W. Finick of Thomas Weisel Partners, it could add hundreds of millions more.

The data-services plan is tame compared to an even bolder gambit: jumping into the shopping-portal business. On Jan. 20, CNET spent an eye-popping $700 million to buy mySimon Inc., operator of a Web site that lets users comparison shop for all manner of products online--not just computers but also books, office supplies, groceries, and even furniture. With in his quiver, Bonnie is taking CNET for the first time beyond its technology roots and putting it on a collision course with giants and Yahoo!

Bonnie insists this is a "logical extension" of CNET's reach, and analysts give CNET strong odds. "Comparison shopping will win out on the Net over [Amazon's] one-price model," says Finick. But turning CNET into everything-Net may not come as easily as its romp in the world of tech. For Bonnie, that's when the fireworks will really begin.

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