QCOM--Internet game comes to Prague
By Thom Calandra, FT MarketWatch.com
Last Update: 3:19 AM ET Oct 10, 2000 NewsWatch
Latest headlines
PRAGUE (FTMW) -- Two weeks after angry protesters peppered Prague with complaints about the dangers of a global economy, several hundred top Internet executives and bankers this week will do their own kind of protesting.
Against a backdrop of plunging Internet valuations and downright company blow-ups, like Priceline.com (PCLN: news, msgs), Europe and America's start-up experts will tell us where the faded online craze will end up.
We'll hear Qualcomm (QCOM: news, msgs) CEO Irwin Jacobs (hopefully) tell us just what took place this week when he met Chinese Premier Zhu Rongji. Qualcomm of San Diego has yet to convince state-owned mobile phone companies in China to license or use CDMA, Qualcomm's wireless technology.
Roundtable rumble
At the European Technology Roundtable Exhibition this week (www.etre2000.com) in the capital of the Czech Republic, we'll hear Phone.com Chairman Alain Rossman (PHCM: news, msgs) tell us why he just appointed a Cisco Systems executive, Don Listwin, as president and chief executive. Phone.com is trying to complete a multi-billion-dollar merger with Software.com. The two hope to become the world leader in the delivery of Internet access via mobile phones and wireless gadgets.
We'll hear CEO Kenneth Krach of Ariba (ARBA: news, msgs) and Chairman Mark Walsh of VerticalNet (VERT: news, msgs) describe the hair-raising roller-coaster ride of their industry, the so-called business-to-business providers of industrial marketplaces for cement, health-care products and other goods and services.
Mostly, I fancy, we'll hear executives tell us nothing about their upcoming quarterly statements -- thanks to the Securities and Exchange Commission's Regulation FD that takes effect next week. The new rule reinforces what the SEC has always required of company executives: the rapid and non-discriminating release of financial information to the investing public.
That's okay. There's a lot more to talk about than numbers.
Game plans
Some executives, like pioneering content publisher CNET Networks (CNET: news, msgs) CEO Shelby Bonnie, surely will tell us they are sticking to their game plan: producing fresh and lively articles, television programming and streaming audio and video for their computer-literate viewers. If the marketplace doesn't appreciate that in the price of CNET stock, well, tough cyber-beans. CNET is taking over rival ZDNet later this autumn.
Most of the Internet executives, and their attending bankers and venture capitalists, are likely to tell us how "the market" got it wrong on Internet stocks -- on the huge upside earlier this year and on the guttural downside happening right now in stock markets around the world.
Burst, baby, burst
Indeed, the executives might even hear a journalist or two, like Internet bubble author Anthony Perkins, tell them how he warned of the consequences. "The ecstasy and the agony," Perkins says he will call his little roundtable with venture capitalists. Fair enough.
The bankers will be in Prague in force, reviewing the year's Internet IPOs. More than 50 percent of 115 new issues on the high-growth Neuer Markt in Germany are now trading below their offering price. The Neuer Markt's benchmark index fell to its lowest point in 11 months this week as investors fled Internet and other technology stocks. (See related story.)
On Nasdaq, it is much the same story. About a third of recent IPOs are thriving. The rest are flailing, and hundreds of companies have postponed or canceled their initial and secondary public offerings, and instead returned to venture capitalists, private-equity arms and plain-old banks for more money.
Wall Street financed almost 600 Internet-related initial public offerings from 1998 to 2000. Most were on Nasdaq. For the most part, the risk-taking venture capitalists were the big winners. As they should be.
Now, the professional money men -- people like Pat Kenealy of IDG Ventures, or Victor Basta of Broadview, Lawrence Calcano of Goldman Sachs or Douglas Alexander of ICG will be asking themselves where they go from here.
I may even get to ask them that in a couple of my own roundtable discussions. Not all the news, as I said, is dire. Amid the turmoil comes opportunity.
The cash bash
After all, Europe's demand for fresh cash to fuel nascent technologies is set to burst its seams. What fortunate timing. American venture capitalists are sitting on tons of capital. Private equity branches of established Wall Street, London and German banks are flush as well. So are private investors, insurers and others. They're all seeking to branch out from their cozy world of Silicon Valley and Silicon Alley start-ups. Europe is the next stop on their gravy train.
After all, Europe's demand for fresh cash to fuel nascent technologies is set to burst its seams. What fortunate timing.
This time, thanks to the worldwide tech tumble, the money crowd will be asking far tougher questions -- and extracting greater stakes -- in return for their dollars. How does the sickly euro influence these well-heeled American bankers? Are European start-ups, especially those that employ the Internet, destined to operate under a shadow cast by their larger American cousins? And how will Wall Street's demand for Internet profits change the lives and valuations of Europe's freshly scrubbed technology companies?
The Internet angels will be there in force as well. The angels are like venture capitalists, with fewer dollars. Some of them operate under the label Internet incubators -- a term that has been the subject of recent abuse as investors ask just how long the sum of an incubator's unsold start-up stakes can exceed the value of the entire operation.
Internet incubators have been hailed as manna from heaven for technology start-ups. They've also been trashed as overpriced, over-hyped orphans. The truth is probably somewhere in the middle. What lessons can we learn from these heights and depths? Many Internet incubators had their marketing act down pat. But is there a there there?
How logical is a strategy of using other people's money to nurture a range of start-ups? Given the public technology market's swooning valuations, how have exit strategies changed? Are Internet incubators like the limited real estate partnerships of the 1980s: good at raising cash, terrible at spending it? And how has shifting public opinion of the once-high-flying incubators -- the good, bad and ugly ones -- spread to new technology companies as a group?
Prague this time around just might have something for everyone, even mom and dad back home. Or not. Stay tuned.
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Thom Calandra is editor-in-chief of FTMarketWatch.com and CBS MarketWatch.com. |
