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Web community builder warns of revenue shortfall

TheGlobe.com warns that its third-quarter loss and projected revenues will miss analysts' targets, citing a seasonal slowdown in online advertising spending.

Struggling community site TheGlobe.com today warned that its third-quarter loss and projected revenues will miss analysts' targets, citing a seasonal slowdown in online advertising spending.

The New York-based company added that it is restructuring its advertising sales department to help beef up revenue growth. It also plans to distribute its games information to other Internet sites and license its community tools to targeted industries.

TheGlobe, built on the once-popular concept of community on the Net via free Web page-building services, said it is aiming to position the company on a clear path to profitability going into 2001.

The restructuring plan will not result in any staff reductions, according to company spokeswoman Jennifer Zwiebel. "We haven't anticipated (staff cuts) to this point," she said. "We've made significant changes here, but at this point, (layoffs) aren't an option."

The company employs about 225 people.

Just a year ago, Web communities such as TheGlobe and Xoom.com were considered the next big hit. Over the past few months, however, many analysts have said that personal publishing will not survive as a standalone business model.

Shares of TheGlobe, which have dropped 88 percent this year, are trading around $1 per share. In first-day trading two years ago, TheGlobe shares surged 606 percent to close at $31.75 after reaching $48.50 a share. The company has since dwindled to a market capitalization of about $31 million.

For the third quarter, TheGlobe expects to report revenues between $6.1 million and $6.4 million and a pro forma loss per share between 37 cents and 35 cents. The company's third quarter ends Sept. 30.

Under the restructuring plan, the company has appointed sales veteran Mark Martiak as its new vice president of sales. Martiak most recently served as vice president of media sales with CMGI's Engage Media. TheGlobe said it intends to add senior sales representatives at several offices, including its corporate headquarters in New York, Boston, San Francisco, Detroit and Los Angeles.

The company in July hired Charles Peck as chief executive. Peck had served as senior vice president of marketing, product and organizational development at the American Institute of Certified Public Accountants. The company's founders, Todd Krizelman and Stephan Paternot, remain major shareholders and co-vice chairmen of the board. Krizelman and Paternot resigned as CEOs earlier this year.

The company, which is aiming to capitalize on the projected long-term growth of Net advertising spending, is focusing on tightening ad-client relationships and expanding its sales presence into Europe. The company said it plans to open a London sales office, which will be its first overseas.

In conjunction with the release of third-quarter results slated for Oct. 26, TheGlobe said it will discuss additional initiatives centered on its business model, along with its timeline for achieving these goals.