IVillage, Womencom Face Issues About Cash: Christopher Byron
Weston, Connecticut, Dec. 20 (Bloomberg) -- On a stormy night long ago, a traveler presented himself at the door of Curmudgeonly Arms and, rapping weakly, was welcomed to our hearth, where he gripped with trembling hands a cup of grog and proceeded to relay a story of such Gothic horror that a chill runs through me even now when recalling the wretched man's face. He said, ``I am married to a woman with ... '' Then pausing in grim reflection, he declared, ``... a woman with `issues.'''
Even now, at the dawn of the digital age, I still recall the sense of helplessness and despair that filled the man's eyes as he told of the complaining and the whining that had marked his days, as if all his wife's failings and disappointments in life had been somehow his fault: I'm too fat ... I can't quit smoking ... I've got another wrinkle ... I can't have an orgasm ... My skin isn't radiant ... I hate aerobics ... I hate to cook ... I hate you!
I think even now of that desperate wayfarer down life's ultimate dead-end journey -- and of how many more men are now doomed to similar suffering and loss -- as women everywhere gear up to cope with what is shaping up as the imminent demise of two Web site operators that play the same distracting role for issue- tortured ladies that a plate of honey plays for ants at a picnic: IVillage Inc. and Women.com Networks Inc.
Book Values
In the last year, the financial underpinnings of these two companies -- propped up with IPO money from the latter stages of Wall Street's great dot-com investment bubble of the 1990s --have all but collapsed, with both concerns now looking, for all the world, to be in a flat-out race to extinction.
Coming down the home stretch, it is almost certain to become a photo finish. The balance sheets of the two companies show book value of just over $100 million each, creating equity per share of $3.67 for IVillage and $2.27 for Women.com. But in both cases the math is preposterous because neither company has assets of much value at all except their remaining cash from the two initial public offerings.
On that basis, IVillage would have a book value of no more than about $1.50 a share, and Women.com of about 70 cents a share. And since neither company has any genuine value at all as an actual business, it is to their cash breakup values that Wall Street now looks in pricing their shares, meaning that as the money runs out, the stock prices of the two outfits will keep sinking inexorably to zero.
Share Performance
In the last year, the stock of Women.com, based in San Mateo, California, has lost 98 percent of its value and is now trading for 31 cents a share. That gives the company a market value of just $14.7 million, versus almost $1 billion only 12 months ago.
IVillage is right behind it. The company's stock has plunged 97 percent during the same period, to 75 cents a share, creating a market value of $22.3 million versus -- as was the case with Women.com -- almost $1 billion a year ago.
Both companies have blown through more than half their cash since Jan. 1, and at an average burn rate of about $10 million a quarter, they are both likely to be out of money before the end of 2001.
Of the two, Women.com looks set to flame out first. The company's revenue peaked in the quarter ended in March, at $14.4 million, and then fell to $8.9 million in the three months ended in September. At that rate, Women.com will, for all practical purposes, be generating almost no revenue at all by June. Meanwhile, its losses keep widening, from $15.5 million in the three-month period ended in March, to $30 million in the September quarter.
Morgan Stanley's Role
In short, Women.com is a business hurtling straight for ruin, which is certainly an outcome that the folks at Morgan Stanley Dean Witter & Co. must have sensed when they took the business public 14 months ago at $10 a share, pocketing $2.6 million in fees for selling the dreck to their own clients.
The operating numbers at New York-based IVillage appear a bit better -- but only if you don't look carefully. True, revenue hasn't yet collapsed. Instead, it's simply flattened out, peaking at $20.8 million in the March quarter, then slipping to $20.2 million in the September period. What's more, the numbers are distorted by about $1 million of barter revenue (that's where you swap promotional ads with another Web site and get to treat the imputed value of the ads as revenue when it really isn't).
In addition, IVillage is now drowning in charges and write- offs. In 1999, the company bought a bunch of women's issues-type Web sites for $156 million in mostly IVillage stock, then wrote off roughly $25 million of it as goodwill. Now, it has written off almost all the rest -- some $98.1 million in all -- as being basically worthless.
A Bad IOU
In a similar spirit, the company's latest quarterly report shows a $5.1 million write-off of a note receivable. This was an IOU that a Web site called BabyGear.com gave to IVillage in July in return for some of IVillage's baby issues-related assets.
Didn't Goldman, Sachs & Co. see this coming when the white- shoe firm underwrote IVillage's initial public offering in March 1999 (3.65 million shares at $24 each), then went back to the trough (offering of 2.7 million shares at $28 each) the following October? I think they were more interested in bagging underwriting fees than in selling their clients stock that was actually worth something.
Anyway, the real story here isn't how Goldman and Morgan Stanley hosed their clients in these junk offerings, it's the misery that men everywhere now face in having to cope with millions upon millions of women no longer distracted by Web sites offering topics like: How to find the best shade of lipstick ... how to make a decision ... how to improve self-esteem ... how to cook ... how to SYM (speak your mind) ... how to ``share'' ... how to ``support our sisters'' ... and, how to engage in cathartic kvetching on topics like workaholic husbands, deadbeat dads and whatnot.
IVillage in Europe
Well, who knows, maybe there's hope yet. From a spy in London comes news that Candice Carpenter, the founder of IVillage, who served as the company's chief executive until July when she was replaced by (arggh!) a man, was busy making the Belgravia and West End rounds recently.
Behind the sighting, it turns out that IVillage has now launched, on Dec. 4, a whole new U.K. mini-me of itself -- this in cooperation with a British food-store chain named Tesco Plc, which is kicking in the one thing IVillage needs even more than men to kick around: about $20 million in financial support.
Well, thank God for Tesco -- and while we're at it, thank God for Candy Carpenter! Just when the night sky seems darkest, dawn's rays may be breaking, as the Web site that gives the gals thought-provoking articles like ``275 Ways to not Gain Weight This Season'' is apparently setting out a whole new plate of honey to keep the ants from getting into the food at, what should we call it, the relationship picnic? If I'm wrong, then what is there to say but: Will somebody out there hurry up and start another women's Web site before it's too late?
Dec/20/2000 0:01 ET
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