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News > Technology
Walker Digital loses glow
November 22, 2000: 11:43 a.m. ET

Priceline, other Walker affiliates suffering from dot.com backlash
By Richard Byrne Reilly
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NEW YORK (redherring) - Walker Digital, the incubator that gave birth to Priceline.com, is struggling to stay alive. The company, based in Stamford, Conn., laid off 100 of its 115-member staff Monday after failing to raise capital.

Walker Digital was unable to secure $35 million to $50 million to keep operations going, according to a former executive who was laid off. The company previously raised and presumably burned through more than $100 million, he says.

The apparent collapse of the high-profile incubator again raises questions about the viability of the plethora of startup factories that have sprung up over the past year. Other high-profile hatcheries that have fallen from their once lofty perches include Idealab, CMGI (CMGI: Research, Estimates) and Internet Capital Group  (ICGE: Research, Estimates).

Company spokesman Kevin Goldman says the layoffs at Walker Digital were part of a "restructuring" that resulted in the closure of three Walker Digital companies -- High Circle, Pulse-123 and Atlantis Interactive.

Goldman insists that Walker Digital has no plans to close its doors or file for Chapter 11.

Divided they fall

Jay Walker, the founder and chairman of Walker Digital, did not return repeated phone messages. "Jay's not talking to anybody," Goldman says. "We're a privately held company."

Walker has been stung by a raft of bad news. His crown jewel, Priceline.com (PCLN: Research, Estimates), has been battered by Wall Street. Its stock price has fallen sharply from a 52-week high of $104.25 per share in March to $2.31 per share Tuesday. That decline has made Priceline.com the target of two class-action suits.

And that's not all.

Just last week, Atlantis Interactive, the technology arm of Walker Digital, said it would shut down, putting 52 people out of work.

  graphic BIRTHING DOT.COMS  
    Walker Digital claims to have invented "more than 150 new Internet business systems and received 67 patents on over 450 patents it has filed to date." Its three best-known companies are Priceline, RetailDNA and Synapse.
   
Last month, Webhouse Club, which also was spun from Walker Digital, said it would shut down. It had undisclosed backing from Vulcan Ventures (Paul Allen's venture fund), Wit Capital and Goldman Sachs, according to one published report. Webhouse allowed consumers to name their own price for gas and food through its Web site. It cut 40 full-time and 100 contract jobs in September; Goldman says he does not know how many employees in total lost their jobs.

Meanwhile, Perfect YardSale, another affiliate of Priceline.com, announced last month that it would close. Goldman declines to say how many employees were let go.

Uncertain future

The future of Walker Digital itself remains uncertain. Reached at his home Monday, Steven Denning, managing partner at General Atlantic Partners, one of Walker's principal backers, confirmed that Walker Digital failed to raise a third round of funding.

Denning added that General Atlantic would not provide further funding to Walker Digital at this time, but that General Atlantic would "support Jay Walker 100 percent. The final story hasn't been written yet."

Company spokesman Goldman insists that the layoffs will help Walker Digital get back on its feet in the long term.

Walker Digital claims to have invented "more than 150 new Internet business systems and received 67 patents on over 450 patents it has filed to date." Its three best-known companies are Priceline, RetailDNA and Synapse.

  graphic WALKER DIGITAL STUMBLES  
    Walker Digital was unable to secure $35 million to $50 million to keep operations going, according to a former executive who was laid off. The company previously raised and presumably burned through more than $100 million, he says.
   
Walker Digital's site still says the company is "preparing to launch additional Internet companies that are in various stages of development." It is unclear how Monday's "restructuring" will affect those plans.

For Goldman, the last couple of days have been ones he would rather forget. "It was painful," he says of the layoffs. "Some people came up to me and said, 'If this ever winds up again, give me a call, because I'd certainly come back.'" graphic

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