TechnologyMeet the dot.com survivors

Meet the dot.com survivors

Despite its name projecting a carefree recklessness, e-commerce pioneer lastminute.com has earned itself a remarkable reputation for caution.

In March 2000, thousands of frenzied punters clamoured for shares at the online retailer’s stock market debut. Speculation on the instant-millionaire status achieved by CEO Brent Hobermann and managing director Martha Lane Fox pumped more hot air into the dot.com bubble.

Their idea remains simple: lastminute.com matches consumers with last minute opportunities to buy airline tickets, hotel rooms and holidays.

Restricted to just 35 shares each, investors who stayed onboard saw the value of their holdings soar to about 500p following flotation at 380p, and then begin a sickening dive. They feared the worst when online retailer boo.com – coincidentally also ran by a photogenic male/female partnership – burnt through $135m and collapsed in a meteoric fall from grace.

Brent and Martha battened down the hatches and weathered the storm.

Since plumbing an all-time low of just 18p earlier this year, lastminute’s stock has risen on news of a series of acquisitions. Last week the share price was hovering just below 100p. Even better news may be on the horizon: Forrester Research predicts the UK online travel market increasing from £592m in 2000 to £3.76bn in 2005.

A carefully-considered acquisition programme has seen the £59m purchase of France’s Degriftour, a £9m takeover of its UK rival TravelSelect.com and the buyout of online holiday firm The Destination Holdings Group for £12m. Most recently the group announced a £32m swoop for French rival Travelprice.com in an effort to consolidate its growing presence on the continent.

Respected 53-year-old finance director David Howell – who joined in July 2001 – is widely credited with steering the acquisition strategy.

Lastminute’s formula is working. In May the group generated considerable surprise by announcing its move into operating profit three months ahead of schedule. Burn rates have been slashed to £1.3m for the first quarter of 2002. With reported cash reserves of £40m, lastminute must continue its tight cost control.

During the three months to March 31 the UK operation, lastminute.com’s largest business, made operating profits of £300,000. Its French subsidiary contributed £200,000. Analysts predict the group moving into pre-tax profits by the end of 2004. Barring unforeseen disasters, lastminute may be capable of fulfiling early promise.

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