Domain Investing

Motley Fool author Rick Aristotle Munarriz has posted an interesting article about Marchex:

The company’s plan is solid. It plans to use its Open List site, which has information on more than 15 million businesses divided into 20,000 different categories, to populate many of its well-trafficked domains.

On paper, the plan appears flawless. Transforming a domain that was once a single landing page loaded with paid-search ads into a site worth bookmarking, with hundreds of dynamic content pages, is just good business.

Legendary domainer Frank Schilling comments on his blog:

I think their names alone are worth “Hundreds of Millions of Dollars” MORE than they paid for them. They have “at least” 5,000 names that could be sold for $100,000 or more .. that’s 500 Million. They absolutely have 25,000 names in the remainder that are worth at least $20,000 each. Thats another 500 million — and they still have another 170,000 names after that, Tens of thousands of which are worth tens of thousands of dollars each.

and:

I would not be surprised if Marchex went private or got bought. Smart, smart, guys running the show there.

True! Marchex has great domains, but for some reason I’m not that excited about Open List. Daily Domainer’s Rene Connor had a post about Open List that compared it with Yahoo’s vertical portals:

Yahoo recently launched the first of a series of initially up to 100 vertical portals. Wii.Yahoo.com aggregates Wii-related user-generated content from a large variety of Yahoo services, including Flickr, del.icio.us, Yahoo Video and more. These portals feel more “alive” than Marchex’s sites simply because Yahoo can draw from a much wider range of actual user-generated content.

It’s clear that Marchex has a lot of potential for improvement. I agree with Frank that their stock is currently undervalued:

This company’s break-up value is so much higher than their stock price..

If they can make their sites more attractive they will be able to pull more profits out of them.