As a direct result of its three-way deal with The Walt Disney Co and Starwave Corp announced earlier this year, Infoseek Corp said it would not reach profitability until 2002. The deal will see Disney take a 43% equity stake in Infoseek in exchange for its interest in Starwave and $70m in cash. The three are set to launch a new portal site called Go.com next month which leverages the combined resources and content of all three principals. Also as part of the deal, Infoseek agreed to spend $165m to market the new service. Now Infoseek, which assumed the lion’s share of risk in the deal, has said in filings with the Securities and Exchange Commission that it will assume a charge in the neighborhood of $74.4m charge for in-process research and development relating to the acquisition of Starwave during the quarter in which the deal closes. In addition, the amortization of various intangible assets and increased operating expenses for the expanded operations will delay the combined companies’ profitability beyond the time frame in which Infoseek or Starwave, as independent entities, may have otherwise achieved profitability. The filing said that: Management currently estimates that the combined companies would not achieve profitability until at least 2002 and, excluding the amortization of goodwill and other intangibles associated with the Starwave merger, until at least 2000. Infoseek also said in the filing it anticipates that its cash, short-term investments and other available funds be sufficient to meet its needs for working capital through at least September 30, 1999, and that it may seek additional funds after that.
