Business

Sources say PointCast sale imminent

Push pioneer is close to deal with Internet backbone company.

Written by Matt Broersma, Contributor Dec. 2, 1998 at 4:00 p.m. PT

PointCast Inc. is close to getting acquired by an Internet backbone provider, according to knowledgeable industry executives who say a final deal for the push pioneer could be announced as soon as this week.

The sources say the two sides have reached a memorandum of understanding for PointCast's acquisition. By late Wednesday, however, the identity of the acquiring company remained unconfirmed. PointCast's chief executive, Dave Dorman, would take a top position at the combined company

The company declined comment.

Analysts said they would be surprised if PointCast commanded anywhere near the $450 million reportedly offered by News Corp. in 1997.

Push technology is a way of using the Internet as a broadcast medium, "pushing" information and software to the user's desktop rather than making them seek it out.

Backbone providers, the companies that own the pipes that carry Internet data, might be interested in PointCast as a way of shoring themselves up against increasingly powerful competition from online portals, such as the combined forces of AOL (Nasdaq:NSCP) and Netscape (Nasdaq:NSCP).

Industry analysts said PointCast could act as an alternative to such portals by offering users the news and information they want without venturing to the services of competitors.

The pack
Sites such as Netscape's Netcenter, AOL.com, Yahoo! (Nasdaq:YHOO), Excite (Nasdaq:XCIT), Lycos (Nasdaq:LCOS) or Infoseek (Nasdaq:SEEK) all offer similar content to what is available on PointCast.

Another factor could be PointCast's one million or so regular users, which could be a valuable audience to a larger company.

Some analysts said that Dorman, with his experience managing a large company, would be an additional incentive to purchase PointCast.

Comet soars, fizzles
A sale would ring down the curtain on PointCast's brief but tumultuous history.

The company was founded in 1992 to provide news and information services via the Internet and corporate networks. PointCast allowed people to subscribe to services that would shoot customized content to their computers.

In short order, PointCast attracted keen attention and some observers predicted that the so-called "push" technology would revolutionize the way people accessed the Internet. But the revolution would have to wait as infatuation led to disillusion.

Dead weight
The bloom came off the rose as corporate IS managers complained that PointCast's software was responsible for clogging up their networks and causing performance slowdowns.

Meanwhile, the company made what in retrospect was the mistake of a lifetime, when it turned down a reported $450 million offer to sell the company to Rupert Murdoch's News Corp. last year.

PointCast's founder Chris Hassett subsequently turned over the reigns to Dorman, the former president and chairman of Pacific Bell. After taking the helm, Dorman attempted to recast PointCast as more of a mainstream media company that would compete against Internet portals.

IPO shelved
As it watched other Internet startups hit the jackpot, PointCast decided it was time to get in while the getting was good and last spring announced plans to go public. But in July, the company surprised the industry when it pulled the plug on an IPO that would have netted about $234 million.

At the time, senior officials said they wanted to pursue conversations with an unidentified "strategic partner." PointCast Inc. is close to getting acquired by an Internet backbone provider, according to knowledgeable industry executives who say a final deal for the push pioneer could be announced as soon as this week.