iVillage Awaits The End

When it comes to running a successful Internet business, sometimes being a
“visionary” just isn’t enough.

Of course, it’s not likely that former iVillage CEO Candice
Carpenter will be labeled a visionary again anytime soon, not after guiding
the women’s Web content network through quarter after quarter of losses that
are mind-boggling even by ‘Net standards.

The latest numbers, for the second quarter, continue this tradition, with
iVillage reporting a net loss of $28 million, or 94 cents per share, up from
$15 million, or 63 cents per share, in last year’s Q2. Including a $9.3
million charge from the sale of its iBaby Web retail, iVillage’s net loss
for Q2 was $37.3 million.

And since its inception in 1995, iVillage has an accumulated debt in excess
of $250 million. That’s Carpenter’s legacy as she exits the post of CEO, to
be replaced by President Doug McCormick, who will preside over the sale of
iVillage, assuming a buyer can be found for this online money pit. Until
then, Carpenter will hang around as chairman of the board and “chief
strategist.”

Carpenter’s departure, announced last week in conjunction with Q2 earnings
in a bid to dilute both pieces of news, comes after months of rumors that
she would be forced out, rumors she and other board members denied. The real
problem would have been if the board had no plans to get rid of her, for
Carpenter’s tenure has been a disaster, especially for investors in the
company.

Indeed, if there was one way Carpenter and iVillage were way ahead of most
Internet companies, it was in the stock market, for shares of the company’s
stock had been free-falling for months before this spring’s ‘Net ticker
meltdown.

After offering at $24 per share and closing at 80 1/8 on March 19, 1999,
shares of iVillage over the next month rose as high as $105 before beginning
a decline that still shows no end. On Friday, IVIL hit an all-time low of 5
5/8. The company’s market cap is now a paltry $185 million.

While the red ink and sinking stock price were bad enough, iVillage has
endured other woes, including three high-profile lawsuits filed by former
employees alleging breach of promise regarding stock options (the cases were
settled earlier this year) and the departure of a number of key executives,
including the CFO and COO in April.

More than anything, though, iVillage hasn’t been able to make its
advertising-reliant revenue model work. For the third quarter in a row,
revenue was stuck in the $20 million range. Try digging out of a $250
million hole with flat growth.

Bottom line: iVillage has emerged as one of the ‘Net’s most mismanaged,
money-losing messes. Carpenter’s departure comes too late; the street has
already given up on the company. All that’s left to do is hold a fire sale.

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