Verio Soars On Pact With AOL
Shares of Web site hosting services provider Verio soared 20 percent Thursday morning after the company said it formed a marketing partnership with America Online.
Under the terms of the agreement, the two companies will offer a range of Web-hosting products and e-commerce services through a co-branded Verio (VRIO) and AOL (AOL) Web site. Verio will pay AOL at least $42.5 million, and Verio will participate in future revenue sharing, the companies said. (Editor's note: CBS News is the broadcast news provider for America Online.)
In exchange, Verio will receive online advertising and promotion of the co-branded site.
Verio shares rose 6 1/2 to 39, while AOL shares were down 1/16 to 87.
More than 3 million of the combined 18 million subscribers to AOL and its CompuServe unit represent Verio's target market of small and medium-sized businesses, Verio said.
Customers of Verio, based in Englewood, Colo., use its services to establish a global Web presence, publish online information and services and conduct electronic commerce and other business Internet activities.
Under the deal, Verio will be the exclusive business Web-hosting provider for AOL, CompuServe, AOL.com and AOL's Digital City. Some 7,000 AOL PrimeHost and CompuServe BusinessWeb customers will be transferred to Verio for continued Web-hosting service.
"Co-branding with AOL will generate enormous exposure for Verio and dramatically heighten our visibility and Web-hosting volume," Verio president Herb Hribar said in a statement.
"Teaming with Verio enables us to offer our existing PrimeHost and BusinessWeb customers new services, as well as the ability to offer other small and mid-sized companies comprehensive Web-hosting and enhanced services at great value," AOL president Bob Pittman said.
"Verio has a good reputation as a good provider of these kinds of services" said Phil Leigh, an analyst at Raymond James."It's clearly a good opportunity for them. Even if a small percentage of [AOL's] 18 million subscribers set up businesses, that's good for Verio," Leigh said.
Written By Stephanie O'Brien, CBS MarketWatch