Tech Stocks
Shares of IVillage Stumble
Despite FamilyPoint Deal
By LISA BRANSTEN
THE WALL STREET JOURNAL INTERACTIVE EDITION
Shares of iVillage slipped along with the market Thursday, despite some analysts' belief that the
company's acquisition of FamilyPoint.com will increase revenues.
In Nasdaq Stock Market trading, shares of iVillage shed 1 7/16 to close at 34 1/2.
Technology shares, meanwhile, declined Thursday. The Nasdaq Composite Index lost 16.56 to
close at 2734.24 and Morgan Stanley's high-tech 35 index inched up 0.06 to 1192.43. The Dow
Jones Internet Index slid 1.86 to 206.76.
Late Wednesday, iVillage announced it had agreed to acquire
FamilyPoint for $26 million in cash and stock. Both companies are
based in New York.
IVillage runs a network of community sites for women that address
such topics as parenting, travel and health and fitness. FamilyPoint,
which has 700,000 registered users, runs a Web site that allows
families, friends and groups with similar interests to communicate
privately over the Internet.
Jason Stell, a spokesman for iVillage, said FamilyPoint provides tools
to create online scrapbooks and calendars aimed at small communities
of users with common interests. He estimated that less than 20% of
FamilyPoint's registered users were also members of iVillage.
While FamilyPoint hasn't had any significant revenue to date, iVillage's
sales force should be able to garner revenue from the site's 700,000 members, said analysts
Michael Parekh and Tonia Pankopf of Goldman Sachs & Co., in a research note Thursday.
Especially important, they said, is the fact that FamilyPoint members tend to spend a good deal of
time on the site.
The analysts estimated that FamilyPoint could eventually contribute $1.5 million a quarter to
iVillage's revenue, but didn't adjust revenue estimates for the company. Because of charges related
to the transaction, the deal should increase the company's per-share losses over the next six
quarters, the analysts said.
Anya Sacharow, an analyst at the New York market-research firm Jupiter Communications,
questioned the value of the deal since she said many of FamilyPoint's tools, such as e-mail and
chats, are redundant for iVillage. But it was a step in the right direction for iVillage, she said,
because it gives the company "groupware" -- features designed to bring groups of people together
for private communications.
For community sites, it has become increasingly important to offer users tools they can use to
congregate online in small groups, she said: "It is an area that iVillage needed to move toward."
IVillage was a stock-market darling this spring, with one of the hottest initial public offerings of the
season. Shares issued in March at 24 had soared to 130 by mid-April. But since that time, the
stock has come crashing back to earth amid a slump in online-media companies. On August 10, the
shares hit a 52 week low of 25 1/2. |
