Judging by the lower-than-expected sales results many Internet firms have
reported since September, it seems that the PC makers aren’t the only firms
seeing a depreciation in the New Economy.
Marimba Inc., Razorfsh Inc. and Snowball.com Inc. — an infrastructure
management firm, a digital solution provider and an online network for young
adults, respectively — all announced shortfalls in projected third-quarter earnings
Marimba, who said failure to complete enough sales transactions in the
quarter contributed to its lower earnings, said it expected to see third
quarter revenues of between $10 million and $10.2 million and a diluted loss
per share of 13 cents to 17 cents, excluding a charge of $585,000 for
deferred stock compensation.
While the firm expects to close the sales next quarter, it wasn’t enough to
keep Bob Maynard, its vice president of worldwide sales, from quitting “to
pursue other interests.” President and Chief Executive Officer John Olsen
has assumed the role of acting vice president of worldwide sales.
Razorfish, too, experienced its own shortcomings, albeit, not as great as
Marimba’s. Revenues for the third quarter will be about $77 to $78 million,
an increase of 1 or 2 percent over the second-quarter, a company release
said. Cash earnings before amortization of goodwill and other intangible
assets will be between 1 cent and 4 cents, compared to 8 cents in the second
quarter, the firm said.
The digital solutions provider, lauded by companies seeking hip redesigns,
said it believed that although it has achieved record revenues in the U.S.,
it has faced a greater-than-expected seasonal impact on its European
operations combined with the strong U.S. dollar. The firm said it will
reconfigure its business approach overseas.
Snowball.com Inc. revealed the worst of the three dips. The firm said
revenue for its third quarter fiscal 2000 is now expected
to be in the range of $5.0-$5.2 million, compared with $6.2 million for the
second quarter 2000 and $1.2 million for third quarter 1999.
The firm said it should expect to report a decreasing pro forma loss between
36 and 38 cents per share, compared to 43 percents per share in the previous
quarter. CEO Mark Jung blamed weakening advertising sales for the losses.
Worse still, the firm said it must can 50 people, or 15 percent of its
workforce, to recoup operating losses.
Weaker sales, weaker sales in Europe, component shortages — these are the
crux of the excuses dot-coms have attributed to lower-than-expected
earnings. Although every firm issues the standard line that it is
“disappointed in the results, but is confident in its business model,”
investors are starting to take notice the day after the shortfalls are
Perhaps no firm worse than Dell feels the wind from its stock dropping so
fast — at the close of trading Thursday, the stock was down $3, or 10
percent, to $25.19. Earlier in the day, the stock touched $25 — its lowest
price since October 1998.
PC firms Intel, Apple Computer Corp. and Dell Computer Corp., whose bread and butter is PC-making, announced
let-downs in the past month, but Thursday’s showings from Marimba, Razorfish
and Snowball.com Inc. hint at what many analysts said would come
eventually — that the high-flying Internet boom may be in for a landing
soon. How rough or soft remains to be seen.