Dot.Frauds on the Run

The game could be up for those non-Internet companies dressed in

Dazed and panicky investors may not have fully appreciated the
beneficial effects of the recent Internet stocks slump, but it’s now
clear that the newly skeptical atmosphere has had one immediate and
positive impact: Bogus Internet companies are being exposed and

And these companies know it. You can bet that’s why Vermont-based pushed back its IPO from Thursday to next week,
reduced the number of shares it will offer from 25 million to 12 million
shares and cut the price range from $11-$13 to $9.

Company executives and the IPO’s underwriters, including Prudential
Securities and BancBoston Robertson Stephens, clearly must have known
the market would never swallow a $250 million offering from a company
with $1.5 million in revenue and $46 million in losses in 1998,
especially a purported “Internet” company that does what does.

Which is to resell electricity generated from “green” power resources
such as wind, geothermal and landfill gas (gas from a landfill is
“green”?) to customers in California and Pennsylvania. Formed in 1997 as
Green Mountain Energy Resources, the company says “more than 99% of our
revenues have come from green electricity sales” in those two states.

Here’s’s link to the Internet: It has a Web site
offering green educational information to users and runs banner ads on
Yahoo! Yeah, supposedly it “markets” its services online, but so what?
I’m sorry, but as noble as the company’s goals may be, none of that
makes it a dot.anything.

Another Internet phony was hammered last week.

Streamline, a Boston-area food delivery company, closed on its first day
of trading last Friday at $7.63, or 24% below its $10 offer price. If
you consider Streamline an Internet company, that’s the worst debut of
the year for a ‘Net IPO.

But Streamline is hardly a pure ‘Net play. The company was formed six
years ago to deliver food and other consumer items to households in and
around Boston. Customers could place orders via phone or fax. Now the
majority of orders are received through the Internet.

All well and good, but surely not an “Internet” play in the manner of a
Lycos, eToys or Wit Capital.

I say it’s time to out these Internet imposters. I’ll be scouring the
S-1s for clues about who is and who isn’t a real Internet company.

To make this determination, I will ask the following: Would this company
exist if the Internet did not exist? If the answer is no, then it’s an
Internet company. If it is yes, as is the case with Streamline and, then it simply is not an Internet company.

(Note: I will cut some slack to companies that are moving to the
Internet from related industries such as networking and software; at
least there’s a defensible rationale in those cases.)

If any of you come across what you think is a dot.fraud, drop me a note. Maybe we’ll keep a posted list.

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