SWEDEN, Nov. 28, 2000 (PRIMEZONE) -- "Lack of shareholders' interest and turbulent financial markets threaten deo's existence" Peter Almberg, deo.com's CEO states and adds: "The offering values deo.com at SEK 30 million ($3 million). Operations are developing strongly and we expect to be profitable prior to our competition".
Deo.com was reorganized in September which resulted in the record company MNW, Swiss pension fund Galsa, Fischer Partners et al becoming deo's major shareholders. As part of the reorganization, a second round of financing with preferential rights for shareholders was scheduled for November. The company also initated an action plan aimed at making deo.com profitable. Operations were focused on online marketing services for record companies. This has, so far, resulted in monthly revenues increasing from 0 to about SEK 1 million, while costs have been cut in half.
The company and its major shareholders have not been able to agree on the company's continued financing. Dotcom companies currenly face severe difficulties in obtaining financing from the Swedish financial markets. Concurrently, several of deo.coms international competitors recently attracted international venture capital at stock prices that reflect the high expectations and potential for music and entertainment on the Internet. For example, Vitaminic which is quoted on the Milano Stock Exchange enjoys a market capitalization of approximately SEK 1 billion ($100 million).
"deo.com has during the past year operated a unique system for sales and management of digital music files. The system facilitates rights management and secure payments for copy protected music files utilizing Microsoft's format, WMT. We have established a strong brand with the music industry and have a membership community of approximately 60,000 members. This is exactly what the record companies are demanding", Peter Almberg concludes.
The equity offering targets the public, business partners, deo's members as well as the company's board, management and personnel. Approximately 51% of the shares of the company will be issued at an offering price corresponding to approximately SEK 15 million ($1.5 million). The board and the management will subscribe for shares in the offering which the company intends to complete as soon as possible.
Alexander Vik and Xcelera's appointee Per Johansson have resigned from deo.com's board. Xcelera's ownership in the company has been reduced to less than 1 percent.
deo.com is the music company of the future. The business concept consists of four parts:
-- Sales & Marketing services - Online marketing services for artists
and labels. deo.com takes responsibility for concept, design,
coordination, execution and advanced follow-up. deo.com puts
"entry points" not only on it's own website, but also on other
websites, to reach more potential customers and to generate
maximum impact of the campaigns.
-- Talent Incubator - Tomorrow's stars are discovered, developed and
promoted mostly with the aid of the Internet. This makes it
possible for deo.com to work more efficiently than a traditional
record company.
-- Music Community - A meeting point for those interested in music.
Visitors to the site can read deo.com Magazine as well as discuss
music in the discussion forums. Visitors also get the chance to
influence tomorrow's range of music by actively participating in
the evaluation of new talents.
-- deo.com Commerce - Digital sale of music (via Microsoft's copy-
protect WMT format) as well as sales of other music-related
products, for example CD's and concert tickets (distributed
through our partners).