Letsbuyit: 'Technology investment worthless' say analysts

European analysts say Letsbuyit.com's lavish investment on a pan-European IT system may prove worthless as an asset for the doomed online group-buying site.

The company is desperately seeking a buyer after filing for bankruptcy protection last Friday, but analysts say that any potential buyer is unlikely to pay much for the company's IT investment. The sophisticated reverse auction system, jointly developed by Letsbuyit.com and Swedish internet consultancy Icon Medialab, is estimated to have cost £20m. Mikael Arnbjerg, market analyst at IDC in Denmark, said the company might experience a similar fate to the Swedish e-tailer boo.com. He said: "boo.com did not manage to sell its elaborate IT system to the buyer, just the brand name and its business model. The potential buyer is likely to restructure the company which could well make Letsbuyit.com's technology investment worthless." James MacAonghus, analyst at Jupiter research said the company's pioneering business plan demanded tailor-made technology. He said: "To roll out a pan-European system is never cheap, but Letsbuyit.com had to develop it from scratch and made costly mistakes en route." The company's former-CEO Hakan Ramsin admitted to silicon.com that the start-up's investment on technology was substantial: Ramsin said: "We had to invest heavily on our infrastructure in the beginning, I think we started off with a budget of $10m, however, I cannot comment on the total cost of the technology because I have not been involved with the company for over 12 months." Speaking to silicon.com, Magnus Winstam, director of Nordic operations at Letsbuyit.com, said: "Yes we invested somewhere between 10-20m pounds on the technology because we needed to develop a pan-European system." Letsbuyit.com was launched in April 1999 in Sweden but is registered in the Netherlands, where on Friday a court granted it provisional deferral of debt repayments, similar to bankruptcy protection. Initially the company attracted many well-known investors, such as PPR Interactive, the internet arm of French retailer Pinault Printemps and European catalogue company Redoute and floated on the Frankfurt stock exchange in July. It has since witnessed a sharp drop in its share price and ceased trading late last week. Currently the company's website is running a message saying "at present we are unable to take any orders". Letsbuyit.com was unavailable to comment further on the company's current situation.