Operator No. 9: January 8, 2001
Whos Got the Last Laugh Now?
As a reporter who writes about Internet and dot-com companies, I and my colleagues at the magazine am precluded from owning stock in the companies we write about. Its an ethics thing. But while I was the belittled by my stock-owning friends last January for not being able to participate in the seemingly unstoppable, upward swinging stock market, especially those dot-coms everyone thought would be the big successes like Webvan Group, Pets.com and eToys its a different story at cocktail parties this year. Pets.com is history. EToys shares, which were trading at $25.12 on Jan. 3, 2000, were being bandied about for roughly 22 cents last week. And home grocery delivery service Webvan, the most ambitious of ambitious dot-coms, is now trading at about 56 cents per share way down from its Jan. 3, 2000, trading price of $18.25. Not one to gloat, I was happy to buy dinner for my "desperately seeking stock market salvation" friends though my suggestion of a big helping of crow didnt go down so well.
While the war wages on over whether the naming rights to Denvers new football stadium will be sold or the old Mile High name will live on, the Denver color guys weighed in and how on the issue during the New Years Eve showdown between the Broncos and the Baltimore Ravens. After tripping again and again over the name of the Ravens new home the old Memorial Stadium name was left behind when the team moved across town in 1999 one of the Denver commentators closed the broadcast of the Broncs sorry 21-3 loss with "Live from PSINet Stadium in Baltimore. And if thats not reason enough to keep the name Mile High, I dont know what is." Hear, hear! As someone who now has to journey to 3Com Park instead of Candlestick, I say the commercial exploitation of stadiums by selling off their names for a temporary period to cash-flush, self-aggrandizing companies should come to an end immediately. After all, dont you think they make enough money off the beer and hot dog concessions?
Get Em While Theyre Hip
The Federal Communications Commission meant to put radio pirates out of business when it announced last summer that it would give low-power FM radio licenses to "community"-oriented broadcasters. But the kinds of people who illegally broadcast Grateful Dead concerts from their car trunk are exactly the types able to easily navigate murky regulatory waters. Evidence? One of the early low-power licensees is Atlantas Fellowship of Holy Hip Hop.
Netpliance founders are offering up their own money as a sign that they think the Austin, Texas, Internet service company is still valuable. A group of investors headed by Chief Executive John McHale plans to buy back the 30 million or so shares it doesnt already own for 65 cents each even though thats nearly twice the price the stock was fetching before the offer. Still, its a far cry from the companys initial offering price of $18 per share last spring. Oh, what a difference a few months make in Internet time.
"The major real estate providers are pretty nervous about technology companies now. Theres a higher level of skepticism about leasing to relatively new companies because so many have downsized and released so much square footage."
GARY NEILL, chief executive of COVASOFT, an Austin, Texas, e-commerce company. Quite ironic, considering that just a year ago dot-coms were fighting for leases, offering to pay exorbitant rents, ponying up huge deposits and giving up equity stakes in their companies in the form of warrants some as high as up to 1 percent.
Napster Cat Attack
Irony alert! Although it distributes software allowing the intellectual property of others to be freely traded, Napster digs in its heels when its own IP is at stake. The Redwood City, Calif., start-up filed suit last week against Sports Service. What raised Napsters hackles? Seems the Southern California marketing and merchandising company has launched a site called NapsterStore.com, where it sells clothing and other items decorated with Napsters cat logo. At least Napster knows the ins and outs of fighting a copyright battle. Meow!
Starving Alaskan sled dogs might be cheering the burst of the Internet bubble. Pets.com donated 21 tons of dog food to feed the starving dogs after it announced in November 2000 its plans to shut down. Overall, its not likely Pets.com will get much for its $7.8 million in inventory on its books at the end of September 2000. Inventory generally gets sold at a big discount to salvage companies when a company shuts down. One of the companys biggest assets, its popular Sock Puppet icon, is claimed by both TBWA/Chiat/Day, the agency that came up with it, and Hakan & Associates, the agency that licenses it to toymakers. Despite Pets.coms troubles, its Sock Puppet toy remains a hot item. And the book Me by Me, the Sock Puppets autobiography, has rocketed onto Amazon.coms list of top-selling titles.
Among the more notable dot-com happenings to catch my eye was the news that Jay Walker, founder of Priceline.com, the name-your-own-price service hawked by noncustomer William Shatner, resigned from the board of the company he founded in 1996 to focus on his new business incubator, Walker Digital. Walkers walkout comes a month after Priceline announced that it would hold off introducing three new name-your-own-price business-to-business, term life insurance and cellular telephone services. Last week, Priceline and W.R. Berkley said they were canceling plans, announced in August 2000, to create an online company to sell auto insurance because the market isnt looking good for such a new business. Walker may be leaving it up to others to figure out how to make a go of the name-your-own-price model, but hes not leaving empty-handed. Forbes magazine named the 44-year-old one of the 400 richest people in the U.S. in 2000, with $1.6 billion; hes ranked at 175. Of course, if they were basing that on the value of his stock holdings, he may have since dropped in the rankings. Hes still way ahead of me, however.