A survey of Internet companies
using data from Pegasus Research International found that 273
of the 339 firms surveyed burned more cash than they took in,
spending $1.8 billion in the first three months of 2000,
according to an article in Barron's Oct. 2 issue.
NEW YORK -- The survey calculated the rate at which the companies were
consuming cash in the second quarter and then projected ahead
to estimate when each Internet company would use up the cash it
had available as of June 30. In the first quarter of 2000, the
companies had consumed $1.7 billion.
In the second quarter, 86 of the 273 companies that burned
through their cash were poised to run out of money within the
next 12 months -- a higher number than the 66 recorded in the
first quarter, the newspaper said.
GenesisIntermedia.com Inc. maintains the No. 1
position on the list of "burn victims" that have had the
fastest cash-depletion rates, while health Web site Drkoop.com moves to No. 2 from No. 10 in the last survey,
OneMain.com Inc., the Internet service provider
recently bought by EarthLink Network, moved to
No. 3 from No. 41 in the survey conducted for the first three
months of the year.
Online retailer Streamline.com, telecommunications
provider Choice One Communications Inc., health care
technology company Medinex Systems Inc., Internet
service provider RMI.NET, Audiohighway.com,
Pacific Softworks and online retailer Bluefly Inc. rounded out the top 10, the newspaper said.
Get help or die
Several of the companies on Barron's list have received
some reprieve from outside financing or mergers, while other
companies have just buckled down, such as Bluefly, which has
increased revenue several fold and decreased customer
acquisition costs, the article said.
Companies like Web consulting firm Organic Inc.,
online music provider MP3.com Inc. and Priceline.com Inc. have made progress in cutting the rate at which
they are burning cash, but the market does not seem to have
recognized the improvements of some of the companies, Barron's
At the same time, there is growing evidence that demand for
advertising is waning, which could filter down to companies
like Juniper Networks Inc., Sycamore Networks Inc. and Corvis Corp.