Fallen Net star BroadVision tries to rise again

By Michael Liedtke, The Associated Press
Monday May 20, 2002

REDWOOD CITY – Internet software maker BroadVision Inc. is wheezing like another high-tech company down to its last gasp after firing nearly three-fourths of its work force and losing $25 billion of its market value in two years. 

Nevertheless, BroadVision Chairman Pehong Chen insists the Redwood City-based company is just getting its second wind. 

“We want people to take us seriously again. What better vindication could there be than proving the world is wrong about you?” Chen said last week after introducing a new version of software that is supposed to herald the company’s revival. 

BroadVision is among a handful of fallen Internet stars trying to rise again. 

The themes of their comeback attempts are strikingly similar. The top executives humbly acknowledge that they got carried away in the dot-com boom and then explain how they have created leaner, more agile companies that are being overlooked in the pervasive gloom of the bust. 

“It’s like we were beneficiaries in this big wave of hype and now we are suffering in all the confusing counter-hype,” said Chen, whose personal fortune has plunged by $5.3 billion during his company’s descent. Chen, 44, owns nearly 20 percent of BroadVision’s sagging stock. 

Wild mood swings are common in the volatile technology industry, but the shift has been much more dramatic during this cycle because the stakes in the dot-com craze were so large, said Tim Miller, president of Webmergers.com, a consulting service that tracks the Internet economy. 

“It’s been like a pendulum on steroids. It really got out of control in both directions,” Miller said. 

There are signs the shakeout is almost over. Internet merger and acquisitions totaled $2.7 billion in April, the highest total in six months, according to Webmergers’ data. Meanwhile, just 12 Internet companies closed or declared bankruptcy in April, the lowest number since August 2000. 

Analysts still believe much of the pessimism surrounding BroadVision is warranted. 

“They have wasted a lot of resources on a lot of dead ends,” said industry analyst Paul Krieg of Legg Mason. “All hope isn’t lost, but they have their work cut out to prove they will be around for the long run.” 

Founded by Chen in 1993, BroadVision emerged as a hot commodity in the late 1990s with e-commerce software that helped handle online customers. 

BroadVision’s business began to slump badly in late 2000 with the failure of so many online retailers. Analysts say the company also was hurt by problems with its software and increasing competition. 

After turning an $18.8 million profit on revenues of $115.5 million in 1999, BroadVision lost a total of $997.9 million during the last two years. The company lost another $36.1 million in this year’s first quarter when its new software sales totaled just $8.2 million — an 81 percent decline from the same time last year. 

Both BroadVision’s stock and work force have shriveled during the downturn. 

The company’s shares peaked at $93.29 in early 2000. The shares closed at 94 cents May 17 on the Nasdaq Stock Market. To avert a possible delisting from the Nasdaq, BroadVision is seeking shareholder approval for a reverse stock split that would increase its stock price, at least temporarily. 

To stay afloat, BroadVision has pared its payroll from a peak of 2,400 employees to about 700 workers. 

As of March 31, BroadVision still had $174 million in cash, which Chen says will be more than enough to keep the company alive until it meets its goal of breaking even by the end of the year. 

BroadVision is pinning its hopes on a new generation of its software, designed to make it easier for companies to provide online services to customers, employees and suppliers. Chen is so confident about the new software that he expects BroadVision to begin hiring new employees again by early next year. 

Despite his optimism, Chen seems to recognize he needs help. On May 15, he hired an industry veteran, Andrew J. Nash, as BroadVision’s first chief operating officer. Nash’s hiring follows the abrupt departures of two top BroadVision executives, Nancy Mills-Turner and Chris Grejtak, earlier this year. 

Industry analyst Krieg said it is unlikely Chen will ever step down as BroadVision’s chief executive, even if the company’s business continues to deteriorate. 

“This is personal for Pehong,” Krieg said. “He was viewed as a visionary on the way up and now he wants to prove he still knows how to run a viable company.”