[00-7-18] Spiked In Australia: Youth Web Market Fails To Deliver
By Staff, Computer Daily News.
SYDNEY, AUSTRALIA,
18 Jul 2000, 12:50 AM CST
Spiked In Australia: Youth Web Market Fails To Deliver 07/18/00 SYDNEY, AUSTRALIA, 2000 JUL 18 (NB) -- By Staff, Computer Daily News. The youth-oriented Web business was looking decidedly dog-eared last night after two Australian-based players with international ambitions - Spike Networks and K*grind - separately announced cutbacks, a refocusing of activities, and, in K*grind's case, new ownership.
Spike revealed a loss of A$27 million (US$15.78) for the year to June 30, on revenues of A$17 million ($9.93 million), and said it has: closed operations in Los Angeles and Melbourne, Australia; moved Asian operations to its joint venture with Pacific Century CyberWorks of Hong Kong; and is scaling back its youth-oriented "Spike Radio" Web-based project.
K*grind said it had sold half its business to a property developer with Asian connections for A$5 million (US$2.92 million) after spending an estimated A$10-12 million in recent months.
The news from Spike follows the recent departure of most of the original executives including founder and original chief executive Chris O¹Hanlon.
At a glitzy launch in Sydney in July last year, Spike had forecast revenue of A$20 million ($11.69 million) and a loss of A$5.9 million ($3.45 million) for its first 12 months. But sales fell short and losses went sky-high.
In Monday's statement to the Australian Stock Exchange (optimistically titled "Profit Forecast") Spike executives blamed this on: losses generated in Spike Radio; further losses in US services operations - now terminated, with the Los Angeles office closed; costs of positioning services operations in Japan, Hong Kong and Australia; and one-off transactional costs associated with establishment of the Spike CyberWorks joint venture.
The Melbourne office was closed on July 14. Australian activities are now consolidated in Sydney. Spike Radio continues, but spending has been reduced.
The statement adds: "The group's financial position is strong with no debt and approximately A$21 million ($12.27 million) in cash on deposit." Spike shares closed on the Australian Stock Exchange Monday at 96 cents, down 3c.
Meanwhile, Sydney-based property developer Metroland will take control of youth Web portal K*grind in a A$5 million ($2.92 million) deal outlined on Monday, and will switch its focus to marketing back-end technology to Metroland's Asian connections.
K*grind calls itself a "convergent media network focused on the 15-24 demographic." It has been offering Web channels on subjects like surfing, skateboarding, fashion and hiphop music, via a multi-platform technology that delivers differing content to broad and narrow band devices, WAP phones and other devices.
But it is believed to have burned through more than A$10 million ($5.8 million) this year.
Metroland spokesperson Gary Lewis, who said he will be joining the K*grind board and executive team, told a media teleconference on Monday the ASX-listed property group would initially inject A$1 million, with A$4 million to come on completion of due diligence.
It will acquire 51 percent of the capital. Current shareholders of K*grind include Taiwan-based PC maker Acer and Macquarie Technology Funds.
Metroland's plan is to open new revenue streams by peddling K*grind¹s content and back-end technology to its Asian connections, including the China-based Harbin Institute of Technology (HIT) - one of Metroland's largest shareholders.
Lewis said he expected the A$5 million to last more than a year, suggesting major reductions to current headcount. He declined to estimate how many of the current staff would survive, but said CEO Jon Peters would remain in that post.
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Reported By Newsbytes.com, newsbytes.com
00:50 CST
(20000718/WIRES ASIA, ONLINE, BUSINESS/)
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