Sunnyvale, California-based push pioneer PointCast Inc, which filed its long-predicted IPO last Friday, has been the subject of puzzled scrutiny in the pages of the San Jose Mercury News. Staff writer Adam Lashinsky combed through the papers PointCast lodged with the Security and Exchange Commission (SEC) and found at least four significant problems facing the company as it moves towards its float. First is churn. PointCast added 850,000 to a million new users last year, without increasing total subscriber numbers from 1.2 million. Those who left apparently cited poor performance, which leads to PointCast’s problem number two. A major technology revamp, which Lashinsky describes as make or break is under way at the company. It may be long overdue but it’s still poor timing for a public offering. Third challenge for PointCast is to raise its inconsistent results above the predicted flat growth for the next two quarters. The company blames seasonality for its variable advertising revenues, but rival Yahoo! has suffered no such fluctuations in the last five quarters of consistent growth. Last and most seriously, PointCast’s content deal with Microsoft Corp’s Active Desktop product is up for renewal in September. New registrations through Active Desktop have slowed to a trickle, and it appears likely that Microsoft will let the deal expire. As PointCast’s lawyers note: Microsoft has a vastly greater installed user base and vastly greater financial, research and development, marketing, sales and distribution resources than PointCast. While officials say they are not aware of any designs Microsoft might have on push, it is acknowledged that a competing product out of the Redmond giant will grind the company into dust. The formidable challenge outlined by these four problems might explain why the PointCast IPO, predicted every quarter for at least the last twelve months, has been so long delayed. Why float at all? Ask CEO David Dorman, former chief executive of Pacific Bell Corp, whose sweetener for joining the company last October was described as heavily equity based (CI No 3,276). In a final irony, the IPO is expected to value at $256m (CI No 3,411) the same company News Corp offered $425m to acquire last March. Will PointCast come to regret having rejected that bid?
