Scoot.com shares halve as it runs out of cash
CEO gone, CFO going
Shares in Scoot.com - the UK online directory - have halved this morning following an announcement that the company is almost out of money (it won't last the next 12 months).
As part of a "strategic review", Scoot will cut 285 jobs, stop any expansion, "change" the way it charges customers ie. charge more, and sacked its CEO Robert Bonnier. CFO Ronald Dorjee is also out the door when they find a replacement.
Actually that's not true, Bonnier has "resigned" because of the "strategic shift" coming up and also, of course, for "personal reasons". Being shouted at is probably a good personal reason to leave.
The share price - already at its all-time low of 7p at one point dropped two-thirds to 2.25p but has now stabilised at 3.5p - a 50 per cent reduction. It's a far cry from the days of the Net boom when Scoot hit 351.5p briefly before rocketing down again to around 160p.
In the last few years, Scoot has seen its turnover rise but at the same time its losses keep pace and its debtors build. This year the company got a boost when major stakeholder Vivendi (22.4 per cent) said it was thinking of buying the company. It pulled out of the deal - presumably after it has a very, very close look at the company - and confidence in the online directory has plummeted since then.
The company is to take another look at its business model which earns a commission on customer referrals to particular companies. It still reckons it will break even this year. Rather than a commission it is looking at an up-front annual lump sum and no free trial services. It will also get rid of on-the-road sales staff and go for a telesales operation, cutting costs.
It is also looking at selling off part of its business, like Loot, in a bid to save itself.
The announcement makes a mockery of Scoot's attempts to deny that Merrill Lynch had been brought in to review the company's approach when it announced disappointing results in March. Today's news is the end result of that review. ®