Nasdaq Threatens To Delist Two More Internet Companies

Whatever remnants of investor confidence in the Internet economy remain could be eroded by the ongoing parade of potential Nasdaq delistings. Two more Internet-focused companies received notice Thursday that they face delisting by Nasdaq because their stock has consistently traded for less than $1 over the past several weeks. and both have requested hearings before a Nasdaq panel to fend off being relegated to over-the-counter status.

Randall Oliver, director of investor relations for online ticket-seller, says the company remains focused on achieving break-even status by the fourth quarter of this year through improved operating efficiencies and cost-cutting measures. Meanwhile, Richard Lang, chairman of streaming media firm, says the company is eager to keep its Nasdaq listing. No wonder: The firm, an Internet elder founded in 1988 as Instant Video Technologies, was an over-the-counter issue for eight years until joining the Nasdaq exchange in October. "It was pretty unbelievable timing," says Lang. "In retrospect, I'm not sure the time, energy, and expense were worth it."

Some 65 companies were delisted by Nasdaq in January and February, and that number figures to rise substantially in April, when a number of companies could meet their fate:

--Online grocer and one-time Wall Street darling Webvan is scheduled to be delisted in April if its stock, which closed Thursday at 16 cents, doesn't show significant recovery soon;--Netpliance, a maker of Internet appliances currently trading at 41 cents, faces an April 17 deadline; --Former high-flying online community has been on notice since mid-February and is trading at just 19 cents; and Friday will attempt to convince the Nasdaq panel that it can boost its current stock price of 16 cents.

Artistdirect and Netzee also face delisting in the coming months and online apparel retailer Bluefly dodged delisting in February. It's a painful awakening for Internet companies, says Gartner Group analyst Rob Labatt. "If they're delisted, it means there's lowering faith in their businesses," Labatt says. He says many of the companies that have been or are about to be delisted may be paying for premature entry into the public markets. "When in history have companies gone public before logging three to five years of profitability? Never."

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