NBCi To Restructure Web Holdings

NBC Internet, Inc. (NBCi), a dot-com division of the National Broadcasting Company, said Tuesday that it will restructure and consolidate all of its Web holdings under one banner.

The announcement followed the company’s revelation that its revenue and earnings for the rest of this year will be lower than expected, although it did not release exact sales or earnings projections.

In announcing the restructuring, the company said it has about $700 million (US$) in cash and future NBC-TV promotional credits to help it move forward, and that it expects to become profitable by 2002, even though it currently loses about $40 million a month.

Wall Street, already nervous about a string of dot-com failures over the past few weeks, responded instantly, at one point sending NBCi’s stock plummeting nearly 40 percent. By closing Tuesday, shares had settled at $17.63 — light years away from NBCi’s all time high of $106.13 in January.

Putting On a Good Face

“We’re proactively focusing the business on a new product strategy and a new brand, and with that will come some effects on the finances,” said NBCi spokesman Robert Silverman.

The immediate changes will directly alter the e-commerce strategy of the company. NBCi’s e-commerce portals Xoom.com and Snap.com will be incorporated under the banner of NBCi.com. Those two companies were the foundation of NBCi, which formed in November.

The company is now in the same awkward position so many dot-coms have found themselves in lately — trying to maintain a solid public image, while scrambling behind the scenes to survive.

Will Lansing, who has served as NBCi chief executive since March, said Tuesday that retail sites Xoom.com and Snap.com will be dropped in favor of customized entertainment and retailing features. He did not elaborate on how those features will differ from the retailing features of Xoom or Snap.

Lansing also said plans to increase the company’s staff have been cancelled and that new acquisitions will be curtailed.

Confusing Marketing Strategy

Analysts immediately set their sights on NBCi after Tuesday’s announcement, pronouncing the company the latest victim of a dot-com market shakeout. According the analysts, the restructuring, coupled with costs of recent acquisitions and weak revenues, will result in NBCi reporting a net loss of 70 cents per share for the second quarter and a net loss of $2.84 per share for the full year.

Some observers point to an unfocused marketing strategy as part of NBCi’s problem. “When they were making all these acquisitions, it reminded me of a Frankenstein strategy, putting together all kinds of different assets and trying to make them work together,” said Patrick Keane, an analyst with Jupiter Communications. “And none of them were leaders in their categories.”

Some analysts were cautiously optimistic about the company’s chances for success. “While we endorse NBCi’s new initiatives, we do not expect to see the fruits from the execution of its revised strategy for several quarters,” said Tonia Pankopf, analyst for Goldman Sachs.

Narrowing the E-Focus

Like many other dot-com spin-offs of major American media companies, NBCi’s various Web sites seemed to attempt to be all things to all people. Visitors to Xoom.com or Snap.com were inundated with content, shopping options, auction activity, music and video downloads, games, trial offers and even health advice.

According to Silverman, the new NBCi site will be streamlined. “We’re refocusing the strategy around the notion of being your personal agent on the Internet, delivering content and services and e-commerce opportunities that are highly relevant to your interests,” he said.