FOCUS-NBC Internet company launched; stock drops
Reuters, Tuesday, November 30, 1999 at 15:47
(Recasts lede, notes stock slide, adds company comments
paras 8-16, analyst comments para 4, details, adds byline)
By Steve James
NEW YORK, Nov 30 (Reuters) - The NBC television network on
Tuesday launched its first publicly traded Internet company,
NBC Internet Inc. (NASDAQ:NBCI), but Wall Street showed little
enthusiasm and the share price slid from the opening bell.
In the first two hours after NBCI stock began trading on
the Nasdaq exchange, it was down over $10 from its initial
opening price of $88.50. At 2:00 p.m. EST it remained down $10
at $78.50.
One analyst who specializes in initial public offerings, or
IPOs, said it may have been because the new company had not
been publicized much beforehand and investors didn't really
know what it was.
"Maybe it was seen as having no short-term future and in
this business you either hit the ground running or a steam
roller is rolling over you," said David Menlow, of
IPOfinancial.com in Millburn, N.J.
NBC Internet was formed by combining the Snap.com Internet
portal, the community services and direct e-commerce company
XOOM.com Inc. (NASDAQ:XMCM), and select Internet properties of NBC,
which is known as the Peacock Network.
At a news conference at NBC headquarters in the Rockefeller
Center, NBCI unveiled the flagship Web service, Snap
(http://www.snap.com), which provides Internet search and
directory, community, shopping, e-commerce, multimedia and
entertainment services across all bandwidths. It said the
service is a place for consumers to search for, find and buy
virtually anything on the Internet.
NBC, a unit of General Electric Co. (NYSE:GE), is the largest
equity holder in NBC Internet, with a 47.3 percent stake.
Former stockholders of XOOM.com Inc. own 38.8 percent, and CNET
Inc. (NASDAQ:CNET), a former co-parent of Snap.com, holds 13.8
percent.
"For the first time, investors will be able to purchase a
piece of the Peacock," NBC President and Chief Executive
Officer Bob Wright told reporters in the Saturday Night Live
studio. "For 75 years, this has been a network of firsts - the
first U.S. network, the first coast-to-coast broadcasts, the
first color broadcasts, the first stereo. Now we are the first
to launch a stand-alone publicly-traded Internet company."
Noting that estimates showed total electronic commerce
business in the United States would exceed $1 trillion in two
years time, Wright, who will also become chairman of NBCI, said
the introduction of the Internet company was a way to take
advantage by "turning users into buyers.
Chris Kitze, co-founder of XOOM.com in 1996 and CEO of
NBCI, told reporters the new entity combined the selling
dynamism of XOOM with the ability of Snap.com to bring TV
viewers to the Internet portal.
"We are leveraging the power of the Peacock to bring
viewers into the Internet and become buyers," he said.
Demonstrating how he could buy a pair of diamond earrings
on the new site, Kitze said NBCI was not, however, in the
business of "stocking warehouses and shipping.
"We are not filling the orders, (rather) we send it
directly to our merchant partners."
Edmond Sanctis, NBCI President and Chief Operating Officer,
showed that the new Internet site will also satisfy consumers'
need for broadband entertainment.
"Internet users are looking for content that walks and
talks," he said, clicking on the screen to bring up a broadcast
of a vintage Saturday Night Live sketch featuring Gilda Radnor
and Bill Murray.
"We are further leveraging our parentage as a leading
entertainment network," Sanctis said.
NBC Internet has agreed to buy $405 million in NBC network
and cable advertising over the next four years and the Internet
company will promote its services on Clear Channel
Communications Inc.'s (NYSE:CCU) more than 425 radio stations.
The promotions will be integrated on the stations' Internet
sites and Kitze said NBCI had agreed to pay $20 million over
three years to Clear Channel. |
