Dotcom fever fades as investors seek profits.
29 April 2000Financial Times
(c) 2000 The Financial Times Limited. All rights reserved
Dotcom fever is over: companies have begun to shun the once-glamorous suffix, as investors dump internet stocks.
"The whole marketplace is
shaking out," says Martyn Straw, president of Interbrand, the branding
consultancy. "People are beginning to recognise that the basic
fundamentals are still true and just adding a dotcom (to the company
name) is an indication of nothing."
The shake-out coincides
with growing efforts by listed internet companies to focus investors'
attention on potential profits, rather than just revenues. Both
Amazon.com, the online retailer, and eToys, the internet toy store, have
this week highlighted the prospect of future profits.
Last year, more than a
quarter of initial public share offerings in the US were by companies
with dotcom in their name. So far this year, the percentage has declined
to 18.5 per cent, according to CommScan, the research group.
Writing in this week's
New York magazine, James Cramer described the suffix as "the curse, the
scarlet letter". He should know: shares in TheStreet.com, the online
financial news site that he founded, now trade at around $6 1/2 compared
with a momentary peak on their first day of trading of $71.
US internet stocks have
fallen by an average of more than 50 per cent since mid-March. Those
carrying the dotcom tag have been hit slightly harder.
Within the last two
months, a few companies have begun to shed the suffix. Infospace.com, a
provider of commerce, information and communication infrastructure
services, dropped its .com on March 1, arguing that its strategy now
incorporated the online and offline world. Gameplay.com, a UK-based
interactive games company, took the same decision, reflecting the fact
that it gets a larger share of its revenues from interactive television.
But Raghavendra Rau, a
finance professor at Indiana's Purdue University, points out that more
companies are adding the suffix than dropping it - 25 small companies
adopted a dotcom in March and April, in spite of the stock market
One place where the
suffix's late 20th-century glamour lives on is Half.com, Oregon. The
town of 360 people changed its name from Halfway for a year, starting in
January, in a deal with the web site of the same name. Dick Crow,
Half.com's mayor, said yesterday the townsfolk thought the plan a "great
idea", and might extend the name-change for another year.
Copyright Financial Times Limited 2000. All Rights Reserved.