Internet Capital Group
2002 | Case No. E119
Wayne, Pennsylvania-based Internet Capital Group (ICG), a Business-to-Business e-commerce (B2B) holding company was one of the most anticipated IPOs in 1999. ICG’s goal was to build companies that could obtain number one or two positions in their respective markets by delivering the software and services to help businesses increase efficiency and reduce costs. ICG’s operating strategy was to: (1) identify the most attractive B2B companies/opportunities, (2) acquire ownership interests (preferably 40 percent or greater) of partner companies (companies ICG invested in), (3) provide operational and strategic guidance through its Advisory Board and management team, and (4) further collaboration within the partner company network via its central “hub” position. ICG integrated its partner companies into a collaborative network that leveraged the collective knowledge and resources of the entire ICG “keiretsu” of companies. ICG fostered collaboration formally by hosting regular seminars where CEOs and executives of partner companies shared experiences, discussed e-commerce strategies, evaluated various business models, and explored alliances. In 1999, ICG’s shares closed up more than 100 percent in its first trading day, giving it an instant market cap of $3 billion. At its high point in December 1999, it had a market cap of $52 billion, behind only AOL and Yahoo as an Internet stock and larger than GM or Gillette. By 1999, ICG had stakes in approximately 30 online B2B businesses (45 by the end of 1999, 50 by May 2000, and 77 by October 2000). By 2000, however, things had changed for the company. In November 2000, ICG reported a third-quarter loss of $263.9 million, compared with a loss of $15.3 million the same quarter a year prior. During that time, it also laid off 35 percent of its staff (around 50 employees). Moreover, its $4.48 share price was off 98 percent from its year high, taking its market cap down to $1.39 billion. By September 2001, ICG’s stock bottomed out at $.34 and eventually leveled out at $.77 in March 2002. The same industry analysts, who had once touted ICG as a big winner, were suddenly downgrading the stock, the concept, and the future prospects of ICG.
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