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Cash Register: 1-24 April 2000

Tales from the Bubble Economy

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19 Apr 2000 Yahoo.com is rumoured to be looking at buying publishing giant Emap. The online portal is said to be keen on the group because it would give them necessary content for its target market of 18 to 34-year-olds, today's FTreports. Analysts said Yahoo! was eager to buy, following rival AOL's £100 million merger with Time Warner.


AOL's operating profit has more than doubled this quarter, beating analyst forecasts. Since announcing in January it would acquire Time Warner for $160 billion, AOL has seen subscriptions, online buying and advertising rocket. Total sales for the quarter were $1.8bn - up 47 per cent from a year ago.


18 Apr 2000

The share price of Deutsche Telecom's newly floated Internet division -- T-Online -- rose 39 per cent yesterday, valuing the operation at £27 billion. Deutsche Telecom's chairman, Ron Sommer, said the stock was never aimed at the "gamblers".


Lastminute.com's flotation advisers, Morgan Stanley, broke cover yesterday to say they thought the online bucket shop was heavily undervalued. The comments allowed Lastminute to regain that day's losses, closing at 157p - a far cry from its high of 532.5p just four weeks ago. The business is valued at just £124m at the moment.


17 Apr 2000

The 17-year-old behind the original Soccernet site has landed £5.75m in the second round of funding for his latest venture, Schoolsnet.com. Tom Hadfield is studying for A-levels at the moment, but with the help of his dad has turned the UK educational guide into a 30-person set-up. The funding came from regional newspaper group Newsquest and IT solutions provider FDM Group.


Electronics Boutique is considering floating its Internet arm. The company sells computer sofware and games and has more than 200 high street shops in the UK. Its online presence comprises two e-commerce sites. It has signed several portal agreements and more are expected in the next few months.


Q1 results for Ebookers.com show turnover grew to £24.8 million for the period ending 31 March. This is well up on £9.4 million for the three months ending 31 December 1999. It wasn't the only thing to increase – losses were up at £22 million, against £15.7 million for the previous quarter.


AltaVista has dipped out of a planned $255 million IPO because of current market instability, the e-outfit said this weekend. It has not ruled out the idea of an IPO somewhere in the future. Analysts are claiming this is a bad omen for other dotcom offerings.


14 Apr, 2000

Orange has appointed two investment banks (Donaldson Lufkin & Jenrette and Dresdner Kleinwort Benson) to act as advisors, according to the

FT

. The move will fuel rumours that Orange is to be sold off – a move which value it at as much as £30 billion. The disposal of Orange has become a moot point since Vodafone's acquisition of Mannesmann was given the green light this week.


Rage software has worried investors by saying it will wipe out this year's £5 million forecast profit by plugging it into a web-based restructure. CEO Paul Finnegan reckons that by turning the company around to direct sales over the Internet, he can get an extra 35-40 per cent margin on games. The company has already signed a deal with Orange, is waiting on one with Tesco and others are in the pipeline.


Online financial outfit, GlobalNetFinancial.com, has bought for an undisclosed sum, Cyberwolf, a do-WAP-a diddy-diddy and e-commerce Webco. Cyberwolf will help implement the delivery this summer of GlobalNetFinancial.com's financial news and e-finance services on to BT's Cellnet mobile network in the UK.


Freeserve has forked out £4.5 million to acquire an 8.6 per cent stake in NetCall, a British online telephony services outfit. NetCall can generate telephone calls from a Webscreen, an e-mail, a digital TV control, a data feed or from any public phone network.


AIM-quoted Internet incubation and investment company, Cube8.com, has acquired a 20 per cent stake in PVC PR, a Web-focused public relations company. The company has been spun out of Pro Vision Communications to concentrate wholly on Internet clients -- based on the assumption that there are not enough Internet PR companies to go round at the moment.


13 Apr 2000

Virgin Wines has poached two top wine experts for its portal site to be launched this summer. Chris Mitchell and Chris Orr join from WINE Magazine. The two, publisher and editor of WINE respectively, will provide news and view content for Virgin's Web venture. Virgin Wines claimed the two would "demystify the world of wine and bring it alive for more people to enjoy".


Online financial news and trading site E*Trade has exceeded analysts' expectations with its Q2 results. For the first three months of the year, revenues stood at $407 million – 152 per cent up on last year. Ongoing operations hit break even at $130 million, and the company returned a net loss of $23.2 million.


Lloyds TSB has 250,000 Internet customers making it the second largest Net banking service in the UK, the company claims. It hopes to increase that figure to one million by the end of the year.


Foreign companies doing business through UK Web sites will pay no British tax, the director of the Inland Revenue's international division, Gabs Makhlouf, said yesterday. He deemed a Web site or PC "insufficient of itself to constitute permanent establishment of a business".


12 Apr 2000

Virtual conference company RMR is to float on AIM today. Worth £64m, it plans to use the £12.5m from flotation to speed up its conference programme and expand abroad.


Shoutloud.com has become the self-styled king of European domain name reselling, boasting three times the number of domain names as Ebay. It was launched just eight weeks ago. MD Stephen Etheridge said that Europe has woken up to the importance of Internet branding, and since most names had already been bought, many were turning to the re-sale market.


DigiTV outfit Ondigital has postponed plans to float the business for £1 billion until a TV takeover row involving Carlton, Granada and United News & Media is sorted out.


Up-start dotcom start-ups who can't afford their own offices are being offered the chance to rent a desk in central London for £500 a month. Metrocube says its first "physical e-business community" will open in St Pauls later this month. "We're more Youth Hostel than Marriott Hotel," said Metrocube co-founder Charles Hoult.


ItsWine.com has signed a deal with e-licious.co.uk, which provides a Web-based recipe and shopping list service. The sites are linked so users can form a list of all the necessary ingredients for recipes and get a suggested wine list to boot. The food and drink is delivered in a couple of days.


11 Apr 2000

Tesco is to split its e-commerce operation from the main grocery business and bring it all under a new wholly owned subsidiary, the company said today. The creation of Tesco.com will give the online business the "freedom to act quickly and place additional focus in this area with the prospect of exciting growth", the company said today. There are no plans to the spin off the operation, the company said. Tesco.com will be headed by CEO, John Browett, and COO Carolyn Bradley. The e-supermarket expects to spend around £35m in capital expenditure during this financial year to develop its B2C (business-to-consumer) e-business. According to Tesco, its Net-based grocery home-shopping business is the largest in the world and boasts an annualised turnover of £125 million. Tesco claims it is at least two years ahead of its nearest competitor. Tesco's ISP, Tesco.net, has some 400,000 registered users, the company revealed.


British outfit, Gaming Internet, is at an "advanced stage" of negotiations to acquire Sydney-based Consolidated Gaming Corporation Limited, which operates as an on-line and telephone bookmaker.


NewMedia SPARK plc has invested a further £600,000 in Exxactly.com (formerly Bridge4u.com) as part of a £1.6m second round funding. This funding values the business at £15 million, around 12 times the value at which SPARK invested £350,000 for a 28 per cent stake in Exxactly last November. Exxactly has launched a B2B financial portal servicing offshore independent financial advisers.


Seven out of ten UK dot.com start-ups will go bust or be bought out within the next 12 months, while VC money continues to dry up for consumer-focused Net firms, says head of Rubus Consulting, Michael Walton. Sites most at risk are those which sell gifts such as flowers, which can be easily bought on the high street or by phone, Walton told the

The Times

. Adding to the top-heavy heap of paper filed in the last few weeks under "dotcom bubble to burst", the story said a 70 per cent failure rate is significantly higher than the usual 50 per cent rate of a growing economy. True enough, but since it has never been easier to set up a company (PC? Check. Phone line? Check. We're in business), more people than ever before have had a go at becoming the fabled "Net millionaire". It seems likely therefore that a larger number of inexperienced people will go under. It's not hard to draw parallels between Internet fever and the US gold fever of one hundred years ago. Then, thousands of people withdrew their life savings and travelled to Alaska to stake a claim. A few made their fortunes, most failed, and it was the inns and whorehouses which cleaned up. Maybe this is the reason why historians always look so smug.


10 Apr 2000

Jfax and Efax have announced their intention to merge. It will, of course, 'establish the combined company as the clear industry leader in internet-based unified messaging services worldwide', but is more interesting as an affirmation that, on the Web, if it ain't free, it ain't gonna be. Efax's business plan was turned upside down when Jfax popped up offering the same for free. Current customer bases are: Efax, 66,000 paid subscribers; Jfax, 125,000 paid and 2.8m free users. This is a merger of course, leading to some over-complex method of dishing out each company's shares to the other. However, the fact that Efax is to be lent $5m by Jfax and that the combined company will be called (guess what?) Jfax, suggests a somewhat unequal relationship.


Four more start-ups are preparing themselves for entry into the AIM. Mettoni is an IT services firm after £8m; Tribal Group, an internet training company for teachers, wants £30m; ctrlp.com, a digital printing group, is trying to raise £15m; and business-to-business marketing agency iComms Media hopes for £3m.


Snooker stars Stephen Hendry and Ronnie O'Sullivan have put their names to a new portal dedicated to the sport. The Sportsmasters Network has already received £10 million in backing and, as well as news and views, the site will also be a hub for e-commerce and online gaming. Expect a cue to access the site when TSNsnooker.com goes live in August.


Digital mapping firm Whereonearth.com is to supply Yahoo! users with its location finder service. Whereonearth raised £4.8 million in second round venture funding in January and is planning a £250 million float this summer.


BSkyB has invested £10 million in e-commerce outfit, Letsbuyit.com, to boost its e-tailing credentials. Letsbuyit.com's proposition is that the more people who want to buy a particular product, the greater the discount the e-outfit can negotiate with the supplier. BSkyB gets a stake in the e-tailer for its troubles.


5 Apr 2000

QXL.com lost £38 million in Q3 trading, the European online auction house reported today. Operating losses for Q3 up to 31 January 1999 accounted for £10.7 million (£8.1 million in the previous quarter) and acquisition related charges added a further £12.6 million (£2.9 million). National Insurance provisions of £14.8 million also made a big dent in QXL.com's figures. Turnover fell from £1.9 million in Q2 to £1.5 million in Q3. The losses and fall in revenue cast a shadow over other key figures relating to QXL.com's performance. According to the company, membership is up, the number of items auctioned is up, and page impressions served are up. Jim Rose, CEO, said: "These strong results illustrate that we are establishing a solid platform from which to continue to accelerate our growth strategy in the auction market. "Beyond this strong growth, we have delivered on three key strategic objectives: we have migrated the business to a non-inventory based model, we implemented success fees on our consumer-to-consumer auctions and we have strengthened our European presence with nearly 50 per cent of our membership now outside of the UK."


3 Apr 2000

CallNet is reversing into the stock market in a float that could capitalise the company at £700 million. The ISP will merge into software group Primar-E, whose shares were suspended at 15p - valuing it at £19 million - in February. Callnet claims 300,000 UK subscribers for its 0800 Net access service, launched in October 1999. Primar-e, formerly called Stordata Solutions, makes data storage systems.


Tesco plans to spin-off its e-commerce arm TescoDirect. The group will announce the split next Tuesday when it posts its year-end financial results. Tesco will keep full ownership of the division and has no plans at present to float the online shopping business.


Totally plc's first Web site venture, totallyjewish.co.uk, has secured £290,000 in revenue in its first month of business. The cash, from sponsors and advertisers such as The Telegraph, OneTel and De Beers, is committed for the next 11 months. Its 10,000 users from this niche market currently generate an average of 10,000 impressions per day. Totallyjewish.co.uk is one of 170 URLs owned by Totally - others include totallygreek.com, totallyirish.com and totallyrelaxed.com.


ThinkNatural.com is expanding from clicks to bricks with a quarterly mail order catalogue. From this month, UK customers will be able to browse through over 500 products from sections including aromatherapy, herbs and medicinal plants, vitamins and minerals, homeopathy, bodycare and gifts. The company said the move would let it sell its goods to the large proportion of the UK population without Web access.


Gameplay.com is to buy Nordic Games Holdings, a Scandinavian computer games mail order company, for £5.96 million in cash and shares. A further £1.2 million is payable depending on Nordic Games' performance. Nordic Games has 90,000 customers, seven shops in Sweden and Finland, a wholesaling operation and Web sites and catalogues in three languages. It brings Gameplay's European users to 900,000. ®

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