Jupiter's trend line points downward
The future looks grim for a company that often predicted bright days ahead.
March 4, 2002: 2:15 p.m. ET
By Eric Hellweg
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NEW YORK (CNN/Money) - Advertising buffs still miss the Pets.com sock puppet, and a few of us still curse each time we have to drive to the grocery store ("It was so much easier when Webvan was around!").
But to tech industry groupies, the harshest dotcom goodbye could be coming soon. When Nielsen//Net Ratings announced on Feb. 19 that it was abandoning its attempted takeover of Jupiter Media Metrix because of Federal Trade Commission opposition, it signaled the beginning of the end for Jupiter.
You know Jupiter -- the research company that rose to prominence a few years ago with its ubiquitous reports about Internet ubiquity? Jupiter's predictions were like heroin for Net entrepreneurs during the late 1990s, and its numbers were often paraded before salivating venture capitalists as evidence of a company's prospects.
Jupiter's reports had the same allure for many journalists. Need to justify a story? Pull out a Jupiter report, and chances are the numbers would say that the such-and-such market will be HUGE in five years -- a gift like manna from heaven when trying to persuade curmudgeonly editors to green-light story ideas.
But now it looks like the numbers that matter for Jupiter follow a pattern very different from that of the company's typical trend diagrams: Instead of moving up and to the right, they chart precipitously downward. One obvious metric is Jupiter's stock price, which took a nosedive after Net Ratings scuttled the deal, dropping from 81 cents to 19 cents.
The other worrisome indicator concerns the company's cash position. Jupiter ended 2001 with $15.9 million in the bank and expects to burn through $11 million to $12 million this quarter, leaving only $4 million to $5 million in the bank at the end of March. Not good.
"We've created a special committee to pursue strategic options," says Susan Hickey, Jupiter Media Metrix's vice president for investor relations and corporate communications. "It could be selling parts of the company, the whole company, or bringing in strategic investors."
What about declaring bankruptcy? Hickey pauses for a pregnant moment. "At this point," she says, "the goal is to keep the assets in the marketplace."
Of course, if Net Ratings's purchase of the company had gone through, things would be looking very different for Jupiter. The number one Internet tracking firm would have gobbled up number two, securing for Net Ratings a dominant position in online media measurement and analysis. Obviously, this is why the FTC opposed the merger, but some are nevertheless surprised that the agency took action.
"In all of Internet history, I can't recall any deals that have been scuttled by the FTC," says John Corcoran, an Internet and digital media analyst at CIBC World Markets. "The FTC has only a of couple teeth left, but it's used them recently."
If Jupiter goes under, it provides yet more proof that even in-the-know companies couldn't resist the trappings of new-economy excess. "It's a classic dotcom example," Corcoran says. "Jupiter's data allowed a lot of companies to go public, but it grew too quickly and cut back too late."
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