The divide between the strongest and weakest Internet companies in Europe is widening according to the latest edition of the PricewaterhouseCoopers Internet 150, a rolling quarterly analysis of cash burn rates and share price performances of the top 150 publicly listed European internet companies.
The top 25% of companies in the index are, on average, more profitable showing faster sales growth and more effective marketing spend whilst the bottom 25% have seen little sales growth and have rapidly dwindling cash resources. PWC predict that some 18% of companies surveyed do not have the resources to sustain themselves beyond 12 months without fresh funding or “significant remedial action”
38% of the companies were profitable in Q4 2000, up from 28% for the previous quarter and cash burn rates have stabilised despite the rapid decline in external funding. SDales rates are now falling in line with overheads – and in some cases higher than spending – for the first time since June 2000.
Commenting on the latest findings, Kevin Ellis, a partner at PricewaterhouseCoopers, said “Trading in a start-up industry is always tough and the dot.com market is no different. Dot.coms have been labouring under a desperate desire for first mover advantage coupled with huge growth expectations, which have made finding a business model that works a near impossible task. WeÂ’re now seeing those companies who have got it right emerging as the dominant forces in the market while the weaker ones fall by the wayside. We expect this polarisation to continue. Investors should remember that internet companies are still growing 14 times faster than the European economy as a whole.”
