Geo Interactive Media Group Ltd, the Israeli internet application software company has announced a big rise in mid-term losses and a massive setback to the company’s ambitions. The losses, up from $3.5m to $8m, are not in themselves a cause for concern given a strong balance sheet and the fact that promoting innovative software is an expensive business. What is of more concern is revenues of $656,000 and the fact that Geo has put off for at least six months the launch of its next generation software for a major rewrite. Geo has claimed a big advantage over competitors because its Emblaze software means that users do not need to download a plug-in before they can enjoy video and sound over the internet. Instead, Geo now has a US patent for its system in which the first item downloaded is a Java applet that handles decompression of the rest of the material. It was clearly a huge plus and brought the company alliances with IBM, Intel and Computer Associates. Alas, it dawned on Geo in the summer that while it uses current standards, protocols and languages, including TCP/IP, HTML and Java, there was a move towards adoption of additional standards such as DHTML, MPEG 4,XML and multicasting. So the board has taken the brave decision to abandon the launch of upgraded products and dump on its development team the formidable task of rewriting Emblaze to support the new standards. The company draws some comfort from the fact that its competitors, including Microsoft and RealNetworks, are in the same boat. It now has a target date of early 1999 for a big promotion of the next generation products based on the new standards. The outlook now is dismal with the board forecasting that revenues for the year may not exceed the $3m achieved in 1997. Geo believes that the embellishments to Emblaze will widen the potential market to include intranet applications, set-top boxes, video conferencing and IP telephony. Big growth is promised for 1999. But news of all the setbacks pushed the shares down 8.4% to 38 pence. In April, the prospect that Geo might have a ‘killer app’ in a sexy market like the internet, meant the company had no problem raising 23m pounds by offering 18m shares at 145 pence each. Now the poor investors have six months wait to find if Geo can bring its products up to the new standards – and still emerge ahead of its rivals.
