Nets Inc. Files for Bankruptcy Protection; Will Keep Web Site Open
Internet commerce company Nets Inc., led by former Lotus Development Corp. Chief Executive Jim Manzi, said Friday that it filed for bankruptcy protection because it could not get enough long-term financing.
The company said it will shut down most of its operations but will maintain its Industry.net Web site as it examines its options for reorganizing under Chapter 11 of the federal bankruptcy laws.
Formed through the merger of AT&T; Corp.’s new media services and Industry.net in June 1996, the company has offered buyers and sellers of industrial goods and services a site to do business on the Internet since September 1994.
“This decision . . . culminates 14 months of frustration for me,” Manzi said in a statement. “As I said on the day I made my initial investment in this company, there is a great business concept here with great potential.”
For the last several weeks, Manzi had been funding the company with $500,000 a week of his own money. A company spokesman said work on a reorganization plan would start next week.
Manzi joined Industry.net with great fanfare in January 1996, only months after IBM acquired Lotus in a hostile takeover. He aimed to transform the company from a forum where businesses came to discover one another into a full-service facilitator where everything from purchase requests to payments could be processed.
But analysts said the vision was too ambitious and the Internet market was too immature. “Nets bit off far more than a start-up can chew,” said Bill Doyle, a senior analyst with Cambridge, Mass.-based Forrester Research. “They had an impossibly broad objective.”
He said the company’s Industry.net was a good product that has been surpassed by technological advances. Also, IBM and regional Bell telephone companies are now competing in the electronic commerce arena.
“There’s a lot of big boys playing in this space and eyeing this same pie,” Doyle said.
Signs that Nets was struggling began to surface about a month ago with a round of layoffs. Still, the bankruptcy filing took many by surprise.
Manzi had been frantically looking for new financing and had interested some investors, specifically from Japan, the company spokesman said.
Nets also has maintained its rolls of more than 380,000 registered purchasing managers and engineers and about 3,500 businesses offering wares.
Though a skeletal staff was retained to keep up the site, 185 of the company’s 200 jobs have been eliminated. Court papers list liabilities of $10 million, including a trade claim of $1.4 million from AT&T.;
