A Net darling with global plans

THE MONDAY INTERVIEW: John Sidgmore: UUNet's search for a British partner is good news in a rapidly expanding market

The Internet craze has already made millionaires, even a few billionaires, some of them overnight. Investors, particularly in the US, have snapped up shares in small Internet service companies with near-insatiable gusto, driving prices sky-high and sending price/earnings multiples into the stratosphere.

One of the current darlings, UUNet Technologies, was listed this summer, pitched at just $14 a share. By late last week, the shares had breached the $90 (pounds 57) mark. That was good news for the shareholders of Unipalm, the UK Internet company that UUNet is proposing to buy. The all-share offer was worth about 450p when it was unveiled last month.

By Friday, on the back of the recent rapid rise in UUNet shares in New York, Unipalm was trading at 865p, and the offer had received acceptances from more than 90 per cent of Unipalm's shareholders.

Visiting London recently, John Sidgmore, UUNet's chief executive, looked relaxed and confident - remarkably so for a man trying to run a very young company in a fast-changing, highly competitive sector. "It's not difficult to grow in this environment," he said. "Until very recently, we didn't have to make any sales calls; we were just hiring people as fast as we could just to make sure the phones were being answered."

UUNet's core market is business, where the advantages of easy, secure access to the Internet are increasingly apparent. The company offers a comprehensive range of access options, applications and consulting services, not only directly to business but to other online service providers such as Bill Gates' Microsoft, with which it has a strategic alliance to help roll out the Microsoft Network. Microsoft also has a 15 per cent stake in UUNet, and relies on the smaller company to develop and operate a "large- scale, high-speed" network for MSN users.

Formed in 1987 by computer whiz Richard Adams, UUNet has signed up 4,000 business customers, and had revenues in 1994 of $12m (pounds 7.5m), generating losses of $6.9m. Analysts suggest that the company could be in operating profit by next year. Mr Adams' stake is worth nearly $430m, while Mr Sidgmore has to settle for a mere $110m.

As pleased as shareholders appear to be with the company and its management, there are some potential trouble spots ahead. No one is sure to what degree the Internet will blossom into an invaluable corporate tool. Nor is there agreement about technical standards, inter-connectivity, software compatibility or even security, perhaps the key issue now facing Internet providers.

"We have to be able to make the system secure and reliable," Mr Sidgmore said. It is a crucial reqiurement not only to protect copyright and proprietary information but also to permit service providers to charge for their products. The room for fraud remains huge.

"Security is something on everybody's mind," Mr Sidgmore said. "But there is a tremendous amount of capital going into security-related matters, and I believe that within a very short amount of time, the problems will be solved."

The Internet access world is also a highly competitive one. Direct competitors include access providers such as Bolt, Beranek & Newman, Netcom and PSI. But UUNet also faces a threat from large telecommunications companies such as MCI, which are pushing into Internet-related services.

"Of course I'm worried," Mr Sidgmore said disarmingly. "You are a dangerous chief executive if you aren't paranoid and frightened to death about the competition."

But he suggested that being big is not necessarily a guarantee of success. "Sure there are big companies with large resources such as MCI or Cable & Wireless. But big companies have trouble managing the people issues." He believes that small boutique firms will play an important role in the Internet field, in areas ranging from software development to graphic design, even marketing.

"People often prefer to work for themselves, and don't feel comfortable in a large company," Mr Sidgmore said.

The problem, often, is a clash of styles. Large, hierarchical companies find it difficult to communicate with the young, hyper-technologically minded staff that gravitate to the world of the Internet.

"These guys can be pretty strange," Mr Sidgmore said. "They work odd hours, and work out their tensions in untraditional ways."

Nor do many of the very best Internet software developers communicate very well in a corporate context.

"We asked one guy, one of our very best software developers, to speak to some investors. He promptly fainted. He just couldn't speak in public. But he's brillant, so what are you going to do, fire him? No."

Getting skilled help in a fast-growing business is hard enough as it is. "Techno nerds" are part of the deal. Mr Sidgmore is more a suit and tie man. Formerly a marketing and sales manager at GE's information services division, he left to run Intelicom Solutions, a telecommunications software company, in 1989. The company was bought by Computer Sciences Corporation in 1991, but Mr Sidgmore stayed as president.

Venture capitalists backing UUNet approached him last year to put the company on a more commercial footing.

"People kept asking: 'Why would you do this? Why would you work for this small company?' I took it as a challenge."

An economist by training, Mr Sidgmore is a great believer in the Internet and its future. The growth of the market has been accelerating recently," he said. "It's analogous to the growth of the PC market in the 1980s."

Mr Sidgmore expects growth in Europe to accelerate particularly quickly, and reckons the UK is roughly 18 months behind the US in the Internet development curve. On that reading, he said, "1996 is the year of the European growth spurt".

International growth is a clear priority. The company is planning to spend $65m in the US and Canada this year, taking the number of cities served to 150. Thereafter, Mr Sidgmore said, "we are looking at going out into the world."

In each case, the company will seek partners. "It could be in the form of major contracts, an equity interest or even acquisitions, as we have done with Unipalm." Unipalm, the UK-listed service provider, is UUNet's chosen vehicle for expansion in Europe. "Of all the companies we looked at, Unipalm and we have the most similar structure and strategy. It is a very good fit."

Are there any differences between the way the two companies work? Just one, Mr Sidgmore admitted. "The staff in the UK tend to dress better."

Mathew Horsman

Sport
Lionel Messi pictured after reaching the final
world cup 2014
Sport
Lionel Messi and Thomas Muller have shone brightest for Argentina and Germany respectively on their way to the World Cup final
Sport
Brazilian fans watch the match for third place between Brazil and Netherlands
Brazil 0 Netherlands 3: Dutch pile on the misery in third place playoff
Arts and Entertainment
TV The follow-up documentary that has got locals worried
PROMOTED VIDEO
Arts and Entertainment
'Deep Breath' is Peter Capaldi's first full-length adventure as the twelfth Doctor
TVFirst episode of new series has ended up on the internet
News
Ian Thorpe had Rio 2016 in his sights
people
Arts and Entertainment
Original Netflix series such as Orange Is The New Black are to benefit from a 'substantial' increase in investment
TVHoax announcement had caused outrage
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

News
Monkey business: Serkis is the king of the non-human character performance
peopleFirst Gollum, then King Kong - now the actor is swinging through trees in Dawn of the Planet of the Apes
Arts and Entertainment
Blackman: Landscape of children’s literature does not reflect the cultural diversity of young people
booksMalorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
News
One Direction star Harry Styles who says he has no plans to follow his pal Cara Delevingne down the catwalk.
peopleManagement confirms rumours singer is going it alone are false
Voices
Mrs Brown's Boy: D'Movie has been a huge commercial success
voicesWhen it comes to national stereotyping, the Irish know it can pay to play up to outsiders' expectations, says DJ Taylor
Arts and Entertainment
Curtain calls: Madani Younis
theatreMadani Younis wants the neighbourhood to follow his work as closely as his audiences do
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
Douglas McMaster says the food industry is ‘traumatised’
food + drinkSilo in Brighton will have just six staple dishes on the menu every day, including one meat option, one fish, one vegan, and one 'wild card'
Sport
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
Life and Style
Once a month, waistline watcher Suran steps into a 3D body scanner that maps his body shape and records measurements with pinpoint accuracy
techFrom heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
News
Soft power: Matthew Barzun
peopleThe US Ambassador to London, Matthew Barzun, holds 'jeans and beer' gigs at his official residence. He says it's all part of the job
Sport
Joe Root and James Anderson celebrate their record-beaking partnership
cricketEngland's last-wicket stand against India rewrites the history books
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor
Gavin Maxwell's bitter legacy: Was the otter man the wildlife champion he appeared to be?

Otter man Gavin Maxwell's bitter legacy

The aristocrat's eccentric devotion to his pets inspired a generation. But our greatest living nature writer believes his legacy has been quite toxic
Joanna Rowsell: The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia

Joanna Rowsell: 'I wear my wig to look normal'

The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia
Bill Granger recipes: Our chef gives raw ingredients a lift with his quick marinades

Bill Granger's quick and delicious marinades

Our chef's marinades are great for weekend barbecuing, but are also a delicious way of injecting flavour into, and breaking the monotony of, weekday meals
Germany vs Argentina World Cup 2014 preview: Why Brazilians don't love their neighbours Argentina any more

Anyone but Argentina – why Brazilians don’t love their neighbours any more

The hosts will be supporting Germany in today's World Cup final, reports Alex Bellos
The Open 2014: Time again to ask that major question - can Lee Westwood win at last?

The Open 2014

Time again to ask that major question - can Lee Westwood win at last?