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365 to IPO – but not exactly a pure Net company, is it?

Shoots up non-Net revenue streams

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365 Corporation has confirmed its intention to IPO on the London Stock Exchange. Blue blood broker Cazenove is to be joint lead bookrunner alongside Durlacher, the niche investment bank which has re-invented itself as successful Internet upstart.

No market cap figures have been mentioned yet, but we suspect 365 will be in the £300 million-plus category. Not bad for a company that began trading only in September 1997.

365 serves up a very British tabloid diet of sport, entertainment, dating and agony aunts -- hang on this is beginning to sound more like a student union. It calls its channels 'publications' and it pumps out content by email and phone as well as over the Internet.

For the three months to 30 June 1999, 365 generated sales of £4.4 million and operating profit before interest, taxation and amortisation of goodwill of £277K. It has operations in five countries: the UK, France, Ireland, South Africa and - curiously - Chile.

Its heavyweight management team, and 190 employees generating 750,000 unique users generating more than 8.5 million user sessions in September.

Sounds promising for a new Internet company -- real revenues and profit too (even if that has been achieved with smoke and mirrors). But what do these user figures actually mean? Where are the page impressions? Without separating Web use from email and telco use, these figures have little meaning.

And it also sounds like 365 is not a "pure" Net company. It generates revenues from contract publishing deals for other Web sites - and this revenue stream should be judged purely in the way off-line contract publishers are rated. Contracts come and contracts go, and there is nothing intrinsically Internet about them.

The company also shored up its revenue streams in 1999 with the acquisition of a small telco company, Symphony Telecommunications plc. Presumably, this forms a key part of 365's Business Division and its 2000 small and medium business customers.

365's Business Division provides communication services and Internet applications in the UK and Ireland. In other words, it's an IP telephony company - with computer reseller services attached -- and a very small one at that.

365 is stitching together national coverage with 11 telecoms systems dealers across the UK, thereby saving costs, but also pooling revenues.

Aside from cash flow, we cannot see what part 365's telco operations have to play in an Internet content company. ®

Check it out for yourself at 365corp.com

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