The 'I' word has bad week

June 29, 2001 Posted: 1026 GMT

CNN's John McKay

LONDON (CNN) -- It's official. The very word Internet is too heavy a burden to carry in the business world.

As most mainstream companies rack up losses on their Web ventures and Internet start-ups drown in red ink, one of the UK's better-known venture firms, Internet Incubator, announced on Friday it was changing its name.

The move came at the end of a week when Europe's Internet sector suffered a string of setbacks, as executives jumped ship, jobs were cut, alarm bells rung and questions were raised about long-term profitability.

Scoot.com set off the first tremor on Wednesday when it cut more than 280 jobs and announced Chief Executive Robert Bonnier and Chief Financial Officer Ronald Dorjee were standing down.

On the same day European Web recruitment firm StepStone said that CEO Giles Clarke had resigned and that it was searching for a replacement. It did not give a reason for Clarke's departure.

Scoot said in its statement it was seeking a buyer for Loot, the classified advertising business it bought for £180 million ($256 million) last July.

Dotcom star's decline

Worth £2.4 billion at the height of the dotcom boom last year, high-profile Scoot is now worth one-hundredth of that, having fallen victim to an investor flight from companies without clear paths to profit.

"The group's ability to trade beyond September will be dependent upon its success in raising capital from external sources," Scoot said.

But even venture firms like Internet Incubator are changing tack. The firm announced on Friday Chief Executive Nigel Drummond had resigned and the company was changing its name to Avanti Partners because of the tech slowdown.

"In the light of the prevailing market conditions in the Internet and technology sectors, the company should broaden the focus of its business," the firm  said.

While dropping the "I" word from its name, the new Avanti Partners plans to continue giving corporate finance and business advice to tech start-ups, but would also in future offer advice to "companies across a much broader spectrum."

Click and it's all over

Another Internet company decided on Friday, however,  the time for talking was over and decided to act.

Business-to-business (B2B) exchange company J2C, formerly known as Just2Clicks, said it would shut all its businesses except its BestValueZone unit, which it is currently in talks to sell.

J2C plans to ask shareholders to vote on receiving back £33 million to £35 million after posting losses for the six months to March 31 of £34.2 million on turnover of £700,000. Chief Executive Karl Watkin also issued a downbeat message.

"We have clearly demonstrated that B2B markets can deliver significant savings but take-up and usage of B2B generally has been far short of expectations," said Watkins.

After a restructuring announced in February, including job cuts, J2C said it reduced operational cash burn but failed in "strenuous efforts" to find a future with a partner.

Even in the business-to-consumer (B2C) market, a sound business plan does not immunize a company against swings in demand, as motorcycle seller BikeNet admitted when it released its six-month earnings on Friday.

BikeNet said that while it more than halved its half-year pretax loss to March 31 compared with the previous six months to £300,704, its sales of bikes were down 17.5 percent at 288.

"This was below original expectations but derives more from the sharply reduced level of motorbike sales in the UK than any intrinsic concern about the BikeNet business model," said the company.

But the overall message from the European Internet sector this week appeared to be: if it's not working out – get on your bike!

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