GO.com is officially gone.com.
Disney (DIS Quote - Cramer on DIS - Stock Picks) is shutting down its Internet portal GO.com and eliminating its
Disney Internet Group (DIG Quote - Cramer on DIG - Stock Picks) stock, which tracked the performance of its online operations.
The move, which will eliminate the jobs of approximately 400 GO.com employees, is one in a continuing series of illustrations of how established media companies have been condemned to a life of trial and mostly error in their attempts to translate prior successes into Internet dominance.
DIG shares were trading down more than 30% Monday at $4.05. The stock tumbled following
a morning report that Disney would likely eliminate GO.com.
Disney says it will convert each DIG share into roughly 0.19 shares of the parent company. That ratio, at Disney's Monday afternoon price of $30.59, implies a value of $5.92 for each DIG share.
GO.com, launched two years ago as a general-interest portal, relaunched last fall as a site devoted to leisure time interests -- in particular, entertainment, sports, travel and family activities. It links to several Disney properties, including
ABCNEWS.com,
ESPN.com and
Disney.com, which Disney says it will continue to operate.
In its fiscal year ended Sept. 30, DIG reported revenue of $25.4 million, up 8.3% from the prior year, and operating income of $3.2 million, down 6.7%. DIG hasn't yet reported results for the fiscal first quarter ended Dec. 31. The stock peaked at $33.31 a share in January 2000.
The company's fortunes are surprising similar to those of
NBC Internet (NBCI Quote - Cramer on NBCI - Stock Picks), an affiliate of
GE's (GE Quote - Cramer on GE - Stock Picks) NBC unit. NBCI earlier this month
cut revenue estimates for 2001 and said it was cutting 30% of its staff after a round of previous layoffs announced last fall.
One longtime media analyst says DIG Chairman Steve Bornstein has worked hard to turn GO.com around, but GO.com's initial incarnation was problematic. "It wasn't terribly sensitive to the market," says Rich MacDonald, now a principal at
Media Strategic Advisors, a research and consulting boutique. "People thought they could just create it, blow it out, promote it, and people would come because of the Disney association," he says. But, he adds, "The portal itself wasn't branded enough as a Disney product." (MacDonald's firm has no financial relationship with Disney.)
George Mannes
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