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Starseed success builds with blends

The smell of success got even sweeter for Starseed Inc. on Thursday.

The announcement of a blockbuster deal between Yahoo! Inc. and GeoCities brings the Ashland-based company a new level of prestige and financial value.

The mood is very high, said Starseed founder Charley Lanusse, whose company was purchased by GeoCities late last year. Yahoo! is the leading Internet company and GeoCities is No. 3. This is going to be a really, really big powerhouse.

Lanusse, 30, will fly to Los Angeles today to meet with GeoCities officials and discuss the proposed sale to Yahoo! Starseed, which has 15 employees, has continued to operate independently within GeoCities and Lanusse says he doesn't expect that to change.

We're not sure what it means specifically, Lanusse said Thursday of the deal, adding that he didn't learn of it until Wednesday. It's very positive. All the employees are thrilled.

Part of the elation may have stemmed from GeoCities' soaring stock price, which climbed $42.25 a share Thursday to close at $117.25 -- a one-day rise of more than 56 percent.

GeoCities' purchase of Starseed closed in early December. Adjusted for debts that GeoCities assumed, the final sale price was 761,027 shares of GeoCities' stock and $2 million in cash.

When that sale closed, GeoCities' stock was trading for just over $30 a share -- placing the stock portion of the Starseed deal at about $23 million. But the stock has risen rapidly since then and, based on Thursday's closing price, Starseed's stake in GeoCities is worth more than $89 million. At the time of its sale to GeoCities, Lanusse said there were about 30 shareholders.

The proposed sale to Yahoo! would place both

GeoCities and Starseed on firmer financial footing because Yahoo! is one of the few Internet companies turning a profit. GeoCities reported a net loss of $19.8 million for 1998, while Yahoo! reported $49 million in net income for the year.

Yahoo! is best known for its Internet search engine -- and Starseed also made a name for itself by developing a way to search the World Wide Web. Starseed operates WebRing, which creates online communities by linking Web sites of common interests.

Lanusse doesn't yet know whether or how the WebRing technology, developed largely by 20-year-old Starseed partner Saig Weil of Ashland, will be incorporated into Yahoo!'s search engine. From my understanding, we were an important part in the transaction, he said.

WebRing exceeded the — million mark in member sites in December.