theglobe.com to Close Communities
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Citing continued woes in the online ad sector, Alley-based community play Theglobe.com is shuttering much of its business, and sources say the firm is on the verge of shutting down entirely as it seeks to sell its remaining properties.
Despite recently landing big-name advertisers like Coca-Cola and Orbitz, theglobe.com -- which has operated a number of gaming Web sites in addition to online personals and message boards -- said Friday that it is closing its eponymous community site. It will also shut down its WebJump Web hosting service for small businesses.
As a result, the company said it would lay off about 49 percent of its approximately 120 employees.
Also, theglobe.com said it has exited its New York City lease and plans to relocate to a smaller facility this month.
As a result of the restructuring efforts, the company said it expected to take a "significant" one-time charge in third quarter.
Chief executive Chuck Peck said the firm is looking to sell the other Web properties it owns -- such as game sites Games Domain/Console Domain, Computer Games Online, and Happy Puppy and others. Furthermore, theglobe.com also owns print publication Computer Games Magazine, for which it's also seeking a buyer.
Failing that, the company said it would resort to an asset sale.
"Over the past twelve months, we have taken aggressive steps to position theglobe.com for a turnaround or business combination dependant on a rebound in the online advertising sector, but the sector remains severely depressed and there are few signs of a rebound in the near-term," Peck said.
"The decision to discontinue our community operations, which contribute disproportionately to our operating losses, allows our senior management team to focus solely on theglobe.com's core strength -- games," Peck said. "We are not in a position to sustain our online business operations in the long term and are now aggressively seeking a business combination or asset sale opportunity that can step in and ultimately capitalize on the highly targeted audience we have amassed through our leading games information properties."
"We continue to believe in the long-term power of online advertising and like several leading industry analysts, we believe that the current spending slump is a temporary pause in market's overall growth," he added.
That's little consolation, however, as theglobe.com's news would seem to mark the final chapter in the story of a company that at one time represented the very essence of the dot-com boom.
Founders Todd Krizelman and Stephan Paternot, both in their mid-20s, made a paper killing on the company's 1998 IPO, which saw the stock initially rocket up almost 900 percent from its $9 pricing -- one of the biggest run-ups in tech history. The succeeding months saw Krizelman and Paternot becoming poster boys for the Internet revolution, frequenting both the talk show and business press circuits.
But the April 2000 correction saw the beginning of a long decline in valuation, with theglobe failing to maintain its appeal to investors looking for profits rather than glamour.
Struggling in vain to woo enough big-name advertisers to continue at the same frenetic pace, the company in November laid off about 40 percent of its workforce, eventually posting a loss of $39 million for the year, on $29 million in revenue.
Despite the massive losses, the company brought on a new chief financial officer in January 2001, predicting it would reach breakeven by year's end. But four months later, the stock was delisted from Nasdaq for failing to break above the $1 mark, and in May the company reported a 33 percent decline in quarterly revenue amid the ad market's continued instability.
At the time, Theglobe -- with Paternot and Krizelman long removed from day-to-day operations -- said it had about enough cash to last about another quarter.
Executives and spokespeople from the firm did not return phone calls.