Report: Web Firms Still Burning Cash--86 Companies Poised to Run Out with 12 Monthsgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
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Report: Web Firms Still Burning Cash--86 Companies Poised to Run Out with 12 Months
NEW YORK (Reuters) - A survey of Internet companies using data from Pegasus Research International found that 273 of the 339 firms surveyed burned more cash than they took in, spending $1.8 billion in the first three months of 2000, according to an article in Barron's October 2 issue.
The survey calculated the rate at which the companies were consuming cash in the second quarter and then projected ahead to estimate when each Internet company would use up the cash it had available as of June 30. In the first quarter of 2000, the companies had consumed $1.7 billion.
In the second quarter, 86 of the 273 companies that burned through their cash were poised to run out of money within the next 12 months -- a higher number than the 66 recorded in the first quarter, the newspaper said.
GenesisIntermedia.com Inc. (NasdaqNM:GENI - news) maintains the No. 1 position on the list of ``burn victims'' that have had the fastest cash-depletion rates, while health Web site drkoop.com Inc. (NasdaqNM:KOOP - news) moves to No. 2 from No. 10 in the last survey, Barron's said.
OneMain.com Inc. (NasdaqNM:ONEM - news), the Internet service provider recently bought by EarthLink Network Inc. (NasdaqNM:ELNK - news), moved to No. 3 from No. 41 in the survey conducted for the first three months of the year.
Online retailer Streamline.com (NasdaqNM:SLNE - news), telecommunications provider Choice One Communications Inc. (NasdaqNM:CWON - news), healthcare technology company Medinex Systems Inc. (NasdaqNM:MDNX - news), Internet service provider RMI.NET (NasdaqNM:RMII - news), Audiohighway.com (NasdaqSC:AHWY - news), Pacific Softworks (NasdaqSC:PASW - news) and online retailer Bluefly Inc. (NasdaqSC:BFLY - news) rounded out the top 10, the newspaper said.
Several of the companies on Barron's list have received some reprieve from outside financing or mergers. While other companies have just buckled down, such as Bluefly, which has increased revenue several fold and decreased customer acquisition costs, the article said.
Companies like Web consulting firm Organic Inc. (NasdaqNM:OGNC - news), online music provider MP3.com Inc. (NasdaqNM:MPPP - news) and Priceline.com Inc. (NasdaqNM:PCLN - news) have made progress in cutting the rate at which they are burning cash, but the market does not seem to have recognized the improvements of some of the companies, Barron's said.
At the same time, there is growing evidence that demand for advertising is waning, which could filter down to companies like Juniper Networks Inc. (NasdaqNM:JNPR - news), Sycamore Networks Inc. (NasdaqNM:SCMR - news) and Corvis Corp. (NasdaqNM:CORV - news)
-- Carl Jenkins (Somewherepress@aol.com), October 02, 2000
Where did this problem come from? Are the days of the easy IPO over?
-- Chance (firstname.lastname@example.org), October 02, 2000.