The Bad News Gets Worse at NBCi

If NBC Internet (NBCI Quote) were a TV show, it would have been canceled long ago.

The online affiliate of General Electric (GE Quote) said Thursday it would miss 2001 revenue projections by a wide margin and that it was cutting 150 staff positions, or about 30% of its work force.

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The news, in the context of NBCi's previous staff cuts, its previous revenue misses and the weak outlook for Internet advertising, makes an unpleasant situation even worse for NBCi, which has proved unable to parlay its valuable broadcasting brand into any lasting success on the Internet. Given the company's continuing difficulties, says one analyst who follows NBCi, hope for a turnaround lies in major changes, such as a partnership with another Web brand or a reorganization of NBC's different Web operations.

NBCi, a minority stake of which is held by NBC and related operations, was trading off 28 cents, or 6.7%, at $3.90 Thursday afternoon.

Blaming the slowdown in online advertising, NBCi says it will reduce 2001 revenue projections to $100 million from $150 million. It's the third time that NBCi has reduced estimates since last June.

"The [advertising] market is weak," says Arthur Newman, an analyst at ABN Amro. "Once you fall out of the top three, the guys below that get hit particularly hard." NBCi has seen its ranking among the most widely visited Internet sites decline over the past year. (Newman rates NBCi a hold, and his firm hasn't done underwriting for the company.)

The 150 staff positions follow a cut of 180 jobs that NBCi confirmed last fall, and leave the company with roughly 350 employees. The firm, before layoffs and the spinoff of a business-to-business unit, had as many as 853 employees in 2000.

The ongoing bad news at NBCi comes despite what should be a valuable asset for the company: advertising and promotion credits on NBC properties that the online firm has been using to drive people to the site.

NBC has "a good brand," Newman says. "I don't think they ever managed to translate that into a Web brand." What's been missing, Newman says, is online content compelling enough to bring Web users back day after day. "Web content from NBC programming wasn't quite enough," he says.