Research: Quarter Of UK Internet Firms In Danger

More than a quarter of UK internet firms are in danger and could be sold off this year, a study says. Financial analysts Plimsoll Publishing looked at the finances of 656 companies in the “internet services” sector – including firms from Bango (AIM: BGO) and Easynet to RealNetworks (NSDQ: RNWK) and Sapient – and rated them as follows…

— Strong (246, 38 percent) – delivering excellent performance
— Good (83, 13 percent) – holding a respectable position
— Mediocre (83, 13 percent) – needing improvement
— Caution (64, 10 percent) – in a weakened financial position
— Danger (180, 27 percent) – their survival is now in question

“Strong” companies’ profit margin is an average eight percent, and most companies are debt-free, with the firms bringing in sales of £124,000+ per employee. But Plimsoll analyst David Pattison said of the “caution” and “danger” companies: “Their futures look extremely uncertain. Their management are now operating under severe financial pressure where even normal trading is proving hazardous. Many of these firms seem likely to be sold off; they are at an extremely high risk of failure unless they turn their performance around fast.