Tries to Avoid the Ranks of Internet Failures

Brent Hoberman and Martha Lane Fox, co-founders of London-based Plc, might seem to be the faces of Internet boom and bust in Britain.
The Oxford University-educated pair were darlings of the British media when they took their online travel and entertainment company public on March 14, 2000. Now, less than a year later, they appear headed for ruin -judging by a share price that had plunged to 75.25 pence yesterday, down from its 380p IPO price.
Analysts say a close look at the company reveals that Lastminute may have staying power. The company has enough cash - an estimated $115 million on Jan. 1, 2001 - to survive the current plague among e-commerce start-ups.
It`s also built a powerful brand identity: It attracts almost 500,000 visitors a month to its Web site, making it the most active travel site in the U.K., according to Internet research company MMXI Europe. Industry experts say the company could turn profitable two to three years from now on its own or that, if acquired, it might live on as a subsidiary of some larger travel company.
``This company will absolutely make it to breakeven,`` said Heidi Fitzpatrick, an Internet analyst at Lehman Brothers Inc. in London. ``It`s an electronic marketplace without the inventory or supply chain that causes the problems for other B2Cs,`` she said, referring to consumer-oriented Web sites.
Lastminute shares are the only ones, among seven Web site stocks she covers, that she currently rates a buy.
Not all analysts are as optimistic, given the company`s balance sheet. Of the four others who cover the stock, only one says it will outperform the market.
Lastminute had revenue of $23.1 million and a loss of $51.5 million for the fiscal year ended September 30, 2000, according to records from the company and D?griftour Group, the French rival it acquired in October for $74.2 million in cash and stock.
Goldman Sachs Group Inc. analyst Phil Clark estimates that Lastminute`s revenue must grow to $92 million - or four times the current total -for the company to turn profitable by early 2003. Meanwhile, Lastminute is spending cash from its $180.6 million IPO. Lastminute has enough cash, Clark estimates, to survive for nine more quarters at its current burn rate of about $13 million per quarter.
Travel industry veterans question whether Lastminute can meet the quadrupled growth target. Miles Saltiel, director of technology research at WestLB Panmure in London, predicts Lastminute will share the fate of Group Ltd., another glamour-tinged London e-tailer that shut down its designer clothing site last May after losing nearly $120 million for its private investors. ``Lastminute will be a not-dot-com,`` he said. ``They will just run out of cash.``

Lastminute`s survival depends on capturing the leisure and impulse spending of upscale young consumers in seven European countries plus Australia while helping airlines, hotels, and restaurants fill seats, beds, and tables that would otherwise go empty. The air carriers and hotels pay Lastminute a commission equal to about 10 percent of the purchase price on each seat or room Lastminute sells. The Lastminute site also hawks gifts that suppliers can deliver to most U.K. addresses within three hours; Lastminute itself never holds the goods. ``There is an enormous range of activity that people do at the last minute, and we intend to own that space,`` said Hoberman, the 32-year-old CEO who owns 9.2 percent of Lastminute, worth about $17.5 million on Dec. 28. He says he thought up the business in 1996, when he and Fox were both working as telecommunications consultants at Spectrum Strategy in London, because he could never plan his own weekends with girlfriends before Friday afternoon.