There's hope for you yet, Martha

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The Independent Online

I don't know about you, but I'm getting sick to death of hearing about Lastminute.com. The scale of coverage and the hype (that awful hype) was always going to make it the UK's most watched dotcom initial public offering (IPO) ever, but even a monkey could have predicted what was going to happen when the shares started trading. The danger in overhyping a company is that, inevitably, niggling doubt will creep in and eventually the negatives will always outweigh the positives.

The problem with Lastminute.com is not down to greed or lack of a sound business model, but foolishness on the part of corporate bankers and financiers who don't understand the ways of the Internet. Just because it's new and different and exciting, they stick a fairytale price on it. My local corner shop probably takes more business than Lastminute.com, but I'm sure the bankers can grasp the concept of a corner shop, which is why they haven't valued my local shop at a silly price - say £700m, for example - despite the proprietor's resemblance to a certain dotcom princess.

The other problem is that once the floodgates were opened last year - when Freeserve managed to get the stock exchange to change its listing rules - other new companies that had no intention of ever making a profit charged in, seeing it as a quick way to boost their cashflow. All this left the City in a bit of a tizz.

Because of the scant diligence, in contrast to the goldrush-like demand, the City ends up getting carried away and a ridiculously high price is set. And, as we saw last week, retail investors get the bum deal by being left with just a few shares between them. It's funny, because you expect people who earn in excess of £200,000 a year to be clever, but behaviour like this smacks of sheep mentality. Hopefully, the Lastminute.com lesson will have taught them that there's not all that much difference between dotcom business models and those of traditional companies.

There's now all the talk about the so-called bubble bursting as early as the summer. If, by any chance, they mean that new media companies might start to get more realistic issue prices then hip, hip, hooray. I think it's time to start talking down dotcom flotations, or else be faced with a situation like in the US, where more than two-thirds of dotcom floats are now trading well below their issue prices. And it's worth bearing in mind that in the US, people don't consider you to be a serious player until you've been involved in a failed start-up. So, there's hope for Martha Lane-Fox yet.

 

The Lycos MD mystery

With everyone talking about new media skills shortages, particularly at top management level, it came as a bit of a shock to receive a press release last week announcing a replacement for the managing director of Lycos, Charles Walker. Two double-takes later, followed by a couple of phone calls, and I was still none the wiser. The Bertelsmann- owned Lycos has closed ranks, refusing to say anything more than: "Charles has left to pursue other interests."

Without giving notice and during an IPO? Surely a man in Walker's position would have a three-month notice period, and surely he wouldn't have been at the Revolution awards only a week earlier, acting very much the Lycos man (Charles Walker and Lycos were synonymous to most people in the industry).

The inside skinny is that he was pushed by Lycos top management, but of course I can't say that without fear of repercussion. If Bertelsmann/Lycos hadn't wanted journalists to ask questions, they should have thought twice before pushing him aside for a complete unknown just before an IPO. Could this be yet another insight into the German corporate mentality, as seen at BOL, or did Charles just wake up on Monday morning and think "Hey, I think I'll resign today - sod the hard work I've put in for the past three years"? Answers on an email to the usual address, please.

amy@wagswell.co.uk

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