Internet Capital Group Inc. Wednesday cut its workforce by 35 percent.
The layoffs were concurrent with the company’s third-quarter report of a
$263.9 million loss.
For the nine months ended September 30, 2000, the e-commerce company
reported a loss of $98.7 million or $.36 per diluted share as compared with
a loss of $6.4 million or $.03 per diluted share a year ago.
The layoffs, combined with a facilities reduction and fixed asset
write-downs, are expected to counteract the downward spiral, according to
Walter Buckley, president and CEO of ICG. He anticipated the moves to result
in a one-time fourth quarter charge of approximately $25-30 million, of
which $4-5 million will be cash.
“As ICG and the B2B market continue to grow and evolve, ICG is focusing
human and capital resources on partner companies with the most potential to
return near-term value for our shareholders,” he said. “We are also taking
decisive action to strengthen our financial position while continuing to
build on our proven track record of value creation.”
ICG provides operational assistance, capital support and a strategic
network of business relationships intended to maximize the long-term market
potential of more than 70 business-to-business e-commerce partner companies.
ICG’s strategy is to acquire and build business-to-business e-commerce
companies. Because many of these companies are in the early stage of their
development, they have been and are expected to continue to generate losses.
ICG has completed a rigorous process to review its companies using a
stringent set of criteria, according to Buckley. “This exercise has
identified 15 high-potential, private companies in the U.S. in which ICG has
deployed $1.7 billion of capital,” he said.
“ICG will continue to support its network of private U.S. companies with
an emphasis on those that are developing and close to achieving these
criteria but currently fall short of one or more of these disciplined
measurements,” Buckley said. “Partner companies that do not meet these
criteria over time, or where ICG does not own a meaningful stake, will be
managed to maximize value.”
The performance of these partner companies, coupled with the occasional
and unplanned nature of the gains related to ICG’s ownership in them, will
most likely continue to result in wide fluctuations of the company’s
quarterly results.
“As the B2B market evolves, we intend to manage our business with a high
level of financial discipline and rigor. We will maintain a solid position
enabling us to support the development of our leading partner companies,”
said Ed West, chief financial officer of Internet Capital Group.
During the third quarter, the company spent a total of $120 million in
cash for new name and follow-on acquisitions. Cash, short term investments
and available for sale securities totaled $513.9 million at September 30,
2000, on a separate company basis.
“With more than $500 million in liquid resources at quarter end, access
to multiple financing sources, and most importantly the ability to monetize
non-strategic assets, we have significant financial flexibility going
forward,” said West.
During the quarter, ICG deployed $26.8 million of cash and $13.6 million
in ICG stock on new name acquisitions, including eMarket Capital, Fuelspot,
Foods Infomart, OnMedica, and Sourceree. Additionally ICG spent $93.2
million in cash and $197.8 million in ICG stock for 21 follow-on
acquisitions in its existing partner companies, increasing its ownership
position in many of these.
