Slowdown wipes out internet recovery

Slowdown wipes out internet recovery

The worldwide economic slowdown has wiped out signs of recovery in Europe's beleaguered internet sector, with up to 30% of dot.coms at risk of running out of cash, according to a new report from PricewaterhouseCoopers.

The slowdown will also potentially leave many players facing consolidation unless a significant turnaround in trading conditions occurs, according to the PwC Internet 150, a rolling quarterly analysis of cash burn rates and share price performance of the top 150 publicly listed European internet companies.

But the firm said that while prospects look bleak for large parts of the sector, the top performing 25% of European internet companies held their own between January and September 2001, outperforming the FTSE 100 and losing only a fraction of their value over the period.

The slowdown has seen sales growth among B2B companies remain stagnant for the fourth quarter in a row at a company average of EUR10 million (£6.1m), as business investment, especially in new technology, is put on hold.

And mirroring what’s been happening on the high street sales among B2C companies have continued to grow throughout the year, reaching a company average of EUR14 million in the second quarter of 2001 compared to EUR6 million in the same period a year ago.

PwC Business Recovery Services partner Kevin Ellis said: ?A year ago, the new economy operated under new rules, with the promise of growth taking precedence over profit. Today, internet companies are clearly bound by the same rules as the old economy, where profitability is king.?

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