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Pippa in the Press - NEWS FLASH 07.27.00  Pippa
 Jul 27, 2000 10:50 PDT 

Table of Contents:
* Reuters - NetTrends: 'Old Economy' a Plus at Bluelight.com
* Reuters - EarthLink Posts Second-Quarter Loss
* New York Times/AP - Facing Major Losses, World Online Announces New

July 26 2:01 PM ET

NetTrends: 'Old Economy' a Plus at Bluelight.com

By Andrea Orr

PALO ALTO, Calif. (Reuters) - When Abigail Jacobs took a job at Petstore.com
<http://Petstore.com> in January, she was sold on some of the same perks
that have attracted so many people to Internet startups: the casual work
environment and the stock options.

``I loved the atmosphere with dogs running around,'' recalls Jacobs, who
worked for a while at Emeryville, Calif.-based Petstore.com, where the
mostly pet-loving staff was encouraged to bring their dogs to work.

Just four months later, when severe cutbacks at Petstore.com sent a worried
Jacobs back into the job market, she found her standards had changed some.
She describes her current job at Kmart Corp.'s (NYSE:KM
<http://finance.yahoo.com/q?s=km&d=t> - news
<http://biz.yahoo.com/n/k/km.html> ) Bluelight.com <http://Bluelight.com> as
``a startup without the scary feeling.''

A.J. Kohn is another Bluelight employee who left Petstore.com shortly before
rival Pets.com <http://Pets.com> Inc. (http://www.pets.com
<http://www.pets.com> ) (NasdaqNM:IPET
<http://finance.yahoo.com/q?s=ipet&d=t> - news
<http://biz.yahoo.com/n/i/ipet.html> ) purchased all the company's assets
and laid off most of the staff. Kohn, who had relocated from southern
California to take the job at Petstore.com, says his short stint there made
him think about the advantages of working for a more established ``old
economy'' company.

``I really didn't feel like doing another job search in three or four
months,'' he says.

The job market remains so tight in and around Silicon Valley that it is not
easy to see what effect the spate of dot-com closures and layoffs has had on
job seekers. People who lose their jobs typically say they have so many
offers that their biggest dilemma is how much time to take off before they
go back to work.

But the success San Francisco-based BlueLight.com (http://www.bluelight.com
<http://www.bluelight.com> ) has had attracting qualified staffers seems to
suggest the perks that were most popular a year ago are not the same things
employees are looking for today when they go to work for a startup. Many
employees have learned the hard way that stock options don't always make you
rich, and even the coolest work environment is not so much fun when it is
going out of business.

Although Bluelight.com considers itself very much an Internet startup, is
corporate enough that its offices are dog-free and its employees work at
actual desks rather than the makeshift work stations fashioned from doors
that are standard at many dot-com startups. And it has found its affiliation
with Kmart, a 101-year-old company that is about as old economy as you can
get, has become a selling point for many employees.

``I try to explain to people who feel uncomfortable working for a dot-com
that we are more than just a dot-com, so they don't get so afraid,'' says
Bluelight's human resources manager, Pippa Manley. ``Our back end is
definitely Kmart, and our idea is to build a Web site that is totally
integrated with the (brick and mortar) stores.''

Bluelight, which employs about 100 people, says it gets about 250 resumes a
week, many from employees of other Internet companies that have gone out of
business, laid off staff, or seen their stock prices lose a lot of value. A
spokesman says resumes have been pouring in from employees of
Homewarehouse.com <http://Homewarehouse.com> , Reel.com <http://Reel.com> ,
Healthshop.com <http://Healthshop.com> and PlanetRx.com
<http://PlanetRx.com> Inc. (NasdaqNM:PLRX
<http://finance.yahoo.com/q?s=plrx&d=t> - news
<http://biz.yahoo.com/n/p/plrx.html> ), among others.

Not all employees have lost their taste for the risk, the dorm-like work
environment, and the chance -- however slim -- to change the world that
comes with building a company entirely from scratch.

The Petstore.com employees who landed at Bluelight say many of their former
colleagues moved right on to other Internet companies that had no
brick-and-mortar presence. And Jon Holman, a San Francisco recruiter, says a
company like Bluelight with such a close relationship to an old chain of
retail stores, does not fit everyone's definition of an Internet startup.

``Who's kidding who, they're working for Kmart,'' says Holman, who suggests
many Silicon Valley employees would take the attitude, ``Who wants to work
for Kmart?''

One way that Bluelight has remained true to its startup identity is that it
compensates employees with salary as well as stock options (in Bluelight,
not Kmart). What seems to be different in today's environment is the way
employees view options. Many staffers who came from failed startups where
their options turned out to be worthless say they were less willing this
time around to take a lower salary in exchange for a fatter options package.

``I placed a lot more value in salary,'' says Kohn. ``I have a lot of faith
in the company, but I'm not banking on the options as much as I once would

Clearly, just being affiliated with an old-economy company does not make an
Internet business risk-free. Reel.com, which closed up shop last month, had
been backed by the giant video rental chain Hollywood Entertainment Corp.
(NasdaqNM:HLYW <http://finance.yahoo.com/q?s=hlyw&d=t> - news
<http://biz.yahoo.com/n/h/hlyw.html> ), and Toysmart.com
<http://Toysmart.com> had to shut down abruptly in May after Walt Disney Co
(NYSE:DIS <http://finance.yahoo.com/q?s=dis&d=t> - news
<http://biz.yahoo.com/n/d/dis.html> ) decided it would not continue to fund
the money-losing business.

Kmart Corp. says it is committed to Bluelight for the long haul, although
its recent actions show it is also focused very much on the bottom line. The
company on Tuesday said it would close 72 stores as part of a sweeping
cost-cutting measure.

Kimberly Lyons, Bluelight's manager of marketing partnerships, is one person
who has always selected employers with big corporate backers -- and has
learned the hard way that even these ventures do not always work out.

She joined Bluelight in January from NBC Internet Inc (NasdaqNM:NBCI
<http://finance.yahoo.com/q?s=nbci&d=t> - news
<http://biz.yahoo.com/n/n/nbci.html> ), which she left when the stock price
started to tumble and seven of the eight other people in her department

Still, Lyons says she is simply more comfortable in a somewhat corporate
work place. ``At Bluelight we have these cool, fancy-schmancy ergonomically
correct desks,'' she says. ''It's nice.''

``Personally I've never liked dogs in the workplace,'' adds Lyons. ``I don't
even like dogs in my home environment, and even walking down the street,
I'll run from them.''

(The NetTrends column appears weekly. You can reach Andrea Orr at
andrea.orr(at)reuters.com <http://reuters.com> )


July 27 10:19 AM ET

EarthLink Posts Second-Quarter Loss

ATLANTA (Reuters) - EarthLink Inc. (NasdaqNM:ELNK
<http://finance.yahoo.com/q?s=elnk&d=t> - news
<http://biz.yahoo.com/n/e/elnk.html> ), the No. 2 U.S. Internet service
provider, said on Thursday its second-quarter loss narrowed significantly,
beating Wall Street estimates, as its membership base rose 47 percent over
last year.

The company said it lost $35.2 million, or 29 cents a share, in the quarter,
against a year-earlier loss of $50.9 million, or 43 cents a share.

Wall Street analysts on average had expected the Atlanta-based company,
which bought rival ISP OneMain.com <http://OneMain.com> Inc. in June, to
post a loss of 36 cents a share, according to First Call/Thomson Financial.

Including special items, EarthLink said its net loss totaled $63.7 million,
or 52 cents a share, compared with a loss of $39.7 million, or 35 cents a
share, a year earlier.

Revenues for the second quarter grew to $230.9 million from $163.7 million a
year earlier. Its total subscribers rose to 3.69 million from 2.51 million.


New York Times/Associated Press
July 27, 2000

Facing Major Losses, World Online Announces New Strategy

AMSTERDAM, Netherlands -- Facing ballooning losses following a bungled IPO,
Internet service provider World Online said Wednesday it would restructure
and pursue a new strategy focusing on core businesses.
The reorganization of the pan-European ISP followed the arrival in June of
its new chairman, James Kinsella, former CEO of MSNBC.com.
"World Online's new strategy is the result of an intensive, six-week
company-wide effort to identify the organization's strengths and competitive
advantages," Kinsella said in a statement.
World Online will be reorganized into three units centered on its core
activities, the statement said.
An access unit will focus on providing Internet communication services. A
portal unit will focus on shifting from content production to advertising
and e-commerce. And a business services unit will offer network and related
product services to small and medium-sized businesses.
Kinsella replaced Nina Brink, who resigned after she admitted to selling
World Online stock a few months before the IPO, when shares plummeted to
around half the March 17 introduction price of $41.30 (43 euros).
Losses have skyrocketed from $45 million (50 million euros) in the first
quarter of 1999 to $114 million in the quarter ended June 30.
However, the company sought to focus attention on a 37 percent rise in
quarterly sales to $52.1 million, with the total number of subscribers at
3.7 million.
After the announcement, World Online stock fell to $11.23 (11.95 euros),
down 80 cents.

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