How Do Dotcoms Survive?

For Peter Yip, chief executive officer (CEO) of the Chinadotcom Corporation, the multi-revenue-source strategy and good management are two fundamentals that matter a dotcom company's survival in the fierce competition in cyberspace.

Yip predicted that half of some 400 NASDAQ-listed Internet companies will be kicked out of the market during the downturn marked by the 9.67 percent crash on the technology-dominated Nasdaq market on April 14 this year, when 2,000 billion US dollars vanished in the twinkling of an eye. He said that the decline would continue at least 18 months to two years.

Among the remaining players, the top 10 percent including today 's Internet titans like Yahoo! e-Bay and AOL will seize 80 percent of the market, he said.

"The downturn is very healthy for the industry in the long term. It is a correction which will force the investors not to accept every dotcom company in the market and to pay closer attention to the business fundamentals of the dotcom companies, which are how to serve the customers, how to expand the business, how to improve the revenue base and how to make money," he said.

Chinadotcom, the first Asian dotcom company listed on Nasdaq, adopts a tripod business model, namely, distributing content via its portal network, building e-business strategies and solutions for clients and helping them sell services through online advertising.

Internet analysts of the Salomon Smith Barney (SSB) said last week that they believed Chinadotcom will reach profitability by the fourth quarter next year given its multi-revenue-source strategy yet synergistic businesses to become one of Asia's first profitable Internet companies.

"Counting on advertisement alone does not work," said Yip, who has been on the position since January last year, adding that advertising accounts for 46 percent in Chinadotcom's revenues while 51 percent comes from e-solutions and the other 3 percent from e-commerce.

Yip, holding that Internet is an international business, said the multi-revenue-source strategy also means developing a global business to take up an advantageous place.

He vowed to make Chinadotcom enter the top ten in Japan this year and top five next year, step into Europe in 2001 and become one of top ten in the United States in 2001.

"Wall Street values a company on the basis of its consistent growth, confidence and dominant status. Without a multiple strategy, the business cannot be big enough to survive there," said Yip.

The company, which raised nearly 500 million US dollars upon its debut on Nasdaq in July 1999, invests in synergistic Internet companies throughout the Asia Pacific region that add value and depth to its services and portal channels.

Chinadotcom recorded 561 million US dollars in liquid funds as of the end of the first quarter of 2000, with an average monthly burn rate of only 3 million US dollars.

Chinadotcom has grown from just nine offices in Asia with 150 staff when it was started five years ago to 24 offices with over 1, 900 employees in over 10 markets in the Asia Pacific region today.

"The management for an Internet company is very different from that for a traditional one since Internet develops at an astonishing speed," said Yip.

He believed that the most important thing for the management team of an Internet company is to be equipped with a quick and open mind as well as expertise to be able to follow the fast changes in the industry.



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