Risk & Compliance

Don’t Call Me Dot-Com Anymore

As Internet stocks continue to struggle, plenty of companies try to spin Wall Street from focusing on their Web roots.
Lisa YoonDecember 8, 2000

Everyone has a friend that had a silly nickname when they were young, like “Bones” or “Boomer.” It was cool in college, but chances are when those friends graduated, they worked hard to ditch the nickname to appear more professional in the working world. Once- glorious, now scorned Internet companies are going through a similar struggle. For many, recent spin strategies include focusing investors on aspects other than their dot-com- ness, such as performance, customer base, and operating efficiency.

A year ago, it seemed that nearly every company was trying to shoe-horn an Internet strategy into their business model so that they could hang up the dot-com banner and enjoy rich valuations on Wall Street. Now, investor relations professionals do everything they can to avoid the term, as if it were the bubonic plague.

The turn away from the dot-com image has manifested itself in ways ranging from the subtle—such as emphasizing achievements and benchmarks met—to outright denial. For example, ScreamingMedia Inc. changed its name from ScreamingMedia.com. To be fair, the New-York-based digital content distribution firm did make the change in March, a month before Nasdaq’s first major dive. Still, the company makes no bones about its objection to the once trendy suffix. Says an August company press release, “Please do not refer to the company by its former name, ScreamingMedia.com.”


ScreamingMedia, which did not return calls for this report, is certainly not the only one to have dropped the “.com” from its name. Others include GoBizNow, About Inc., and Deltathree. CMGI Solutions, owned by Internet holding company CMGI Inc., is now Tallan, “an Irish-Gaelic word meaning ‘talent,’” explains the company statement. Incidentally, companies are not the only ones dumping associations with the Internet. Boston-based mutual fund Monument Funds Group changed the name of its Web offering from The Internet Fund to Monument Digital Technology Fund.

Other companies have tried to broaden the scope of their profiles beyond that of the Internet. For example, Seattle-based online marketer Aptimus Inc., which changed its name in October, from FreeShop.com Inc., looks to emphasize other attributes. The new name coined from the Latin terms aptus (“unusually fitted or qualified”) and optimus (“most advantageous”), “broadens us so much; we can do almost anything” in terms of business possibilities, says CFO John Wade.

He admits that the conspicuous absence of “.com” was no accident. “We purposely did not call ourselves ‘Aptimus.com.’ All the momentum that was there a year ago–the reasons to put ‘.com’ in your name–are there now in the exact reverse,” he says. Instead, Wade would rather emphasize the company’s partnership with old-line firms. “We’re going after companies that have been around for 50 years as clients.” Still, Wade does not hide the fact that the Internet is the basis of the business. “We’re proud to be a dot-com. We wouldn’t even have a business were it not for the Internet.”

The care Wade takes in emphasizing the non- Internet aspects of the business, without appearing to run away from its identity as a dot-com, exemplifies the complexity of the task of finessing of a dot-com’s image. Companies are clearly taking care not to blatantly reject their Internet selves, which, after all, was their original claim to fame. Most companies insist that they are not in dot- com denial. Instead, many argue that their original name or positioning, didn’t fully encompass all that the company does.

Putting Runs on the Scoreboard

Changing names is only part of navigating the IR landscape in the face if dot-com skepticism. And for many companies, playing down the Internet as the foundation of the business is not an option. Los Angeles-based online toy retailer Etoys Inc. can hardly escape its identity as a business-to-consumer Internet pureplay, perhaps the most reviled variety of Internet company on Wall Street. For them, the biggest IR challenge is convincing investors that it can “walk the walk.”

VP of investor relations Clem Teng, who joined the company a few months ago, says the biggest difference in IR from a year ago is mapping out a path to profitability for investors. “Last year, the hype in the market was just focused on growth. Obviously, that changed earlier this year, when everybody began focusing on profitability. We came out in an effort to calm the market by giving specific milestones on when we would be profitable.” But convincing investors to stay with them is still not an easy task, he admits. “It’s a hard sell, because you are seeing a lot of other dot-coms failing.” And in the narrow space of online retailing, the options are limited for spin. Teng’s strategy takes the traditional road of emphasizing that the company is different because it is better. He cites greater brand-recognition and customer base (“over 2.4 million customers—double what we had a year ago”), and quality of the Web site itself.

Teng also touts the company’s credit- worthiness as a sign of stability among companies that are struggling to get additional funding. “One of the failings [of many dot.coms] is that they could not get financing to continue their business. We have had access to the financial markets via a bond offering, as well as a preferred series D offering. More recently, we received a $40 million-dollar revolving line of credit.” For Teng, the most important IR tenets are consistency and proof. “We kept reiterating the path to profitability from the spring of this year until now,” Teng maintains. “Nothing has changed from that message. It’s what I call putting runs on the scoreboard by showing results quarter to quarter.” Analysts estimate that the company will double its revenues from last year, and the company expects to be profitable by fiscal year 2002.

Burst.com Inc. CFO John Lukrich agrees. Now that investors are impatient for profit, “reliability and accountability are what’s important.” He also says that now, the role of a company’s IR officer has evolved. Instead of simply being a spokesperson akin to a marketing executive, it is now critical for the IR officer to be familiar with strategic planning. “It’s important to understand the company’s strategic direction in a deep, more mature way.” For its part, Burst.com, which makes client/server network software, has no plans to flee from its dot-com identity. In fact, the San Francisco company changed its name to Burst.com from Instant Video Technologies Inc. While Lukrich admits it added “.com” then because it “gave value,” the company is not about to remove it now.

In the end, that kind of honesty is probably the best way to approach IR. Investor relations expert Moira Conlan of the Financial Relations Board says that while spin strategies like changing names are “not a bad idea,” at the end of the day, they won’t be the answer, because investors have wised up to the viability of business plans.

“The Street’s not stupid. They know what’s going on. You can change your name if you want, but to the extent that you’re doing business over the Internet—that’s the next thing people are going to read. You need to prove to the Street that you have a model that’s going to work and a credible management team. You have to put out your milestones, and you have to meet them. Basically, you have to establish credibility over time.” That is, if you have time. And Internet companies that are built on shoddy foundations may find they just can’t shake that old nickname— “Flounder.”