Net Value: Valuing Dot-Com Companies—Uncovering the Reality Behind the Hype
by Peter J. Clark and Stephen Neill
Amacom, 2001
250 pages, $27.95

The book examines what the authors call "netPhase II"—the transition when Internet companies mature and become high-value providers of products and services. Clark and Neill, partners with VBM Consulting, tell you how to identify dot-com survivors with whom you can do business. Clark recently discussed some of the book's key points with Karen Southwick.

CIO Insight: The dot-com era seems to be history. Even what we thought were successful Net companies like Yahoo are struggling. What gives?

Clark: [To draw a conclusion now] is like judging a baseball game based on two innings. We're in purgatory right now, where you'll have a lot of false signals about the recovery. There has to be a bloodletting and then a positive foundation formed to move forward. We'll be at the bottom when people stop asking, "Is it time to buy Cisco now?"

How can a CIO at an established company separate dot-com survivors from non-survivors?

Clark: Ask them: "Are you in a market where your segment can command 40 percent of the entire market, Internet and non-Internet? Can you get 40 percent of Internet demand?" The final question is: "If you're successful in this market, how do you prevent others from entering?"

Who would you designate as a successful Internet company today?

Clark: The model for the future will be AOL/Time Warner, with its combination of old economy and new economy. If access to sustainable financing is going to be a key, AOL is one of the few companies that already qualifies.

What should traditional companies do now about the Internet? Should they still be trying to transform their businesses for the Internet Age?

Clark: First, take advantage of the changes in the labor market. I've seen too many instances where people who went to work for the corporate intranet were the dregs of the labor pool. So upgrade your labor. Then you've got to get over this egotistical idea that you need a dot-com with your company's branding on it. Rather, look at the dot-com with the same tough scrutiny as any other use of funds. Companies have to think, "Do I have something that will really create unique value online?"

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