Dotcom fever fades as investors seek profits.
420 words
29 April 2000
Financial 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, 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, 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., 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., 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 fall-out.

One place where the suffix's late 20th-century glamour lives on is, 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,'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.

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