So what's a dial-up Internet subscriber worth? To Mindspring (NASDAQ:MSPG) about $612 a piece. To Wall Street about $2,000 to $4,500 depending on how you look at it. For the same subscriber.

Here's how: The national ISP has agreed to acquire ICG's 400,000 NETCOM subscribers for $245 million ($215M cash, $30M stock). Yet investors value Mindspring subs at $4,500.

Obviously there's some of the deal already discounted into MSPG but even at $2,000 it looks like a great gap MSPG realized, paying about 20 to 25 percent of 'retail.' Our chart shows the difference between these ISP powerhouses:

We're not showing Mindspring's pending buy of NETCOM in the tally and estimate it has 500,000 subscribers, just to get a sense of how far ahead Wall Street may be with its MSPG enthusiasm. Raw numbers show ELNK trading at 43 percent of MSPG. Even if we add in the NETCOM bump and double MSPG revenue as a result, we arrive at a trading multiple that's almost exactly what ELNK's is. And still ELNK looks like 78 percent of the value sub for sub of MSPG.

Some of that may be attributed to Mindspring's new girth with the accounts, and surpassing the 1 million magic milestone in all likelihood if the deal closes.

Mindspring's story, however, draws out rival EarthLink's (NASDAQ:ELNK) position clearer to show its colors also. EarthLink, in bed with Sprint for equity and to feed it new subs, is already at the 1 million mark -- and its annualized revenue is 57 percent higher.

Even when we toss in MSPG's revenue boost from NETCOM, slating total annualized revenues at $200 million, Mindspring appears to trade a little frothier than EarthLink. Our abacus shows that if we assume Mindspring at 1 million subs, at Jan. 14 market cap that's $2,500 per subscriber.

On the other side of the equation, EarthLink's 1 million subs were valued at $2,000 a piece.

Since the deal was announced Jan. 6, MSPG shares have dialed up 75 percent higher to $115.75 per share, as investors discount ahead some of the boon for the buck, before slipping to close January 14 at $81.3125 per share.

With NETCOM, Mindspring instantly catches up to rival EarthLink (NASDAQ:ELNK) in the 1 million subscriber milestone. But the value gap highlights either one of two things to us - MSPG may be ahead of itself or ELNK may be behind the valuation curve, relatively speaking. Knowing the EarthLink team's commitment, we would lean towards the latter.


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