In Business This Week: Headliner
David Wetherell: Netting Some Winners
Score a triple play for David Wetherell, CEO of Internet holding company CMGI. On May 12, USA Networks chief Barry Diller withdrew his bid for Lycos in the face of opposition from CMGI, the leading shareholder, and other Lycos investors. The same day, Wetherell said Gateway 2000 will invest $200 million in CMGI, joining Intel, Microsoft, and Sumitomo as strategic investors hoping to profit from CMGI's Net keiretsu model. At the same time, Gateway rival Dell Computer took a 4.9% stake in CMGI's Navisite, a Web-site hosting company.
Wetherell says the deals show CMGI is getting respect for the services it provides through its Net companies--and not just for its explosive stock showing. Since January, CMGI shares have risen 328% on the promise of IPOs for its portfolio companies. "Every PC manufacturer is concerned with how to optimize their PCs for the Internet," he says.
What's next? CMGI insiders say Wetherell hasn't ruled out a bid for the 80% of Lycos that CMGI doesn't own, now that Diller is out of the picture.EDITED BY KELLEY HOLLANDReturn to top
First Web Auctions, Now This
Ready for "We Commerce?" That's the idea behind Mercata, an online shopping venture backed by billionaire investor Paul Allen. Mercata, due to be launched May 17, is based on the idea of giving volume discounts. The site, which will start with more than 1,000 products, will add up demand for a given product, such as a Harmon/Kardon stereo, and then negotiate a group rate: more buyers, lower price. To bring in enough consumers and educate them on the novel service, Mercata plans to unleash a multimillion-dollar ad campaign on July 4. Eventually, Allen hopes to tie Mercata in with his investments in cable television and Internet properties such as the portal Go2Net.EDITED BY KELLEY HOLLANDReturn to top
Bill Gross to Pointcast's Rescue
Entrepreneur Bill Gross has proven he can start internet companies. Now he'll try to resuscitate one. On May 11, ailing venture PointCast said it will be acquired by LaunchPad Technologies, a San Diego startup funded by Gross's idealab! incubator. PointCast pioneered "push" technology, which delivers customized news and other content to subscribers' PCs. Says Gross: "I want to combine the loyalty of the PointCast user with our expertise in E-commerce." LaunchPad specializes in E-commerce tools, which will be incorporated into PointCast's service.EDITED BY KELLEY HOLLANDReturn to top
Serves 'Em Right for Overcharging?
Whirlpool says it will appeal a $581 million verdict leveled May 7 against a former subsidiary by an Alabama jury. The maker of home appliances was ordered to pay plaintiffs who claimed they were misled about the financing terms for their $2,000 purchase of two home satellite-TV dishes. They used a credit card issued by Whirlpool's former subsidiary, Whirlpool Financial National Bank, to make the purchase. Whirlpool called the verdict a "gross miscarriage of justice." Both sides expect the size of the award to come down. Meanwhile, it should fuel the debate over big jury awards.EDITED BY KELLEY HOLLANDReturn to top