USWeb

USWeb is an Internet marketing company based in Aliso Viejo, California. Originally founded as a Web design company, it expanded during the dot-com boom into consulting and marketing. After several mergers with other companies, its parent company went bankrupt, and USWeb emerged as a separate entity whose focus has now shifted more toward search engine optimization.

Founding and expansion

The company was founded in 1995 by a group of former Novell executives, Joe Firmage, Toby Corey, and Sheldon Laube along with Ken Campbell and Jim Heffernan from outside firms. USWeb set up a network of affiliated companies that provided website design, content development, and hosting services to clients. It began taking in venture capital in March 1996 with a round of financing led by Softbank.

Using its venture capital resources, USWeb began buying up some of its affiliates. Firmage explained the approach as a form of franchising, but rather than create a series of consistently similar outposts under a unifying brand, USWeb took the approach of developing a diverse network in which outlets would specialize in different areas. The company went public with an IPO in December 1997 at $10 a share.

The stock rose over the next few months, allowing the share price and stock options to fuel further acquisitions. USWeb ultimately bought up at least 31 other companies, including Ikonic Interactive. To some degree, it took over a role previously played by CKS Group, an advertising agency that had similarly been buying web companies. CKS had gone public earlier, but its stock had dropped sharply not long before the USWeb IPO. Firmage conceded that the situation reflected an internet bubble, but contended that the company's knowledge base would help it scale as it integrated different units.

Merger with CKS

On September 2, 1998, USWeb announced that it would merge with CKS Group, its erstwhile rival. The merger was a stock transaction involving an exchange of 1.5 shares of USWeb stock for each share of CKS. At the time, USWeb was still losing money while CKS had managed to post a profit in its latest quarter. With an estimated value of the transaction approaching $350 million when the deal was announced, the combined market capitalization of the two companies was around $728 million. The news prompted a fall in USWeb's stock price while CKS stock, which had been trading near 52-week lows, rose initially but then fell again.

Among the benefits touted was joining USWeb's technical skills with the marketing savvy of CKS. The merged company was to be renamed Reinvent Communications, but the new name did not stick and the company was generally known as USWeb/CKS or simply USWeb. With the merger, the company had nearly 2,000 employees and important clients including Apple Computer, Levi Strauss, and Harley-Davidson. Since both companies had been busy making acquisitions, the deal prompted concerns about integrating these into a single organization and a potential culture clash between former rivals.

Firmage initially was to become CEO of the combined company with Mark Kvamme, CEO of CKS, as chairman. Before the merger was complete, however, Firmage resigned in November to become chief strategist and was replaced by former Oracle executive Robert Shaw. Firmage then left the company entirely in January 1999, amid reports about his belief in UFOs and extraterrestrial intelligence.

Merger to form MarchFirst

In December 1999, after buying boutique management consulting firm Mitchell Madison Group for over $300 million dollars, USWeb merged with Whittman-Hart, another consulting firm based in Chicago. The combined company, a merger of equals, had over 10,000 employees with annual revenues exceeding $1B. This deal involved Whittman-Hart exchanging 0.865 shares of its stock for each share of USWeb, and another new name as MarchFirst Inc. The new company was headed by Whittman-Hart CEO Robert Bernard. Shaw was announced as chairman, but resigned prior to taking on that role.

With the burst of the dot-com bubble, MarchFirst went into bankruptcy in April 2001 and its assets were liquidated. Some of the units, including USWeb and Whittman-Hart, survived the breakup and re-emerged as separate companies.

References

*Bicknell, Craig. "USWeb to Buy CKS for $324M". "Wired News", 2 September 1998.
*Gimein, Mark. " [http://www.thestandard.com/article/0,1902,193,00.html Playing the Price] ". "The Industry Standard", 1 May 1998.
*Harmon, Steve. " [http://www.internetnews.com/bus-news/article.php/58031 Short & Long Of It: USWeb's $350M Stock Swap For CKS] ". "Internetnews.com", 4 September 1998.
*Kaplan, Karen. "The Cutting Edge: Web Firm Has Atypical Franchise Approach". "Los Angeles Times", 28 October 1996.
*Kopytoff, Verne. " [http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/04/29/BU112488.DTL On a click and a prayer: 6 dot-com CEOs reflect on their wild rides] ". "San Francisco Chronicle", 29 April 2001.
*Nerney, Chris. " [http://www.networkworld.com/netresources/0602isp2.html USWeb buys six of its affiliates] ". "NetworkWorld", 21 April 1997.
*Pelline, Jeff & Dawn Kawamoto. " [http://news.com.com/USWeb,+CKS+Group+to+merge/2100-1001_3-215131.html USWeb, CKS Group to merge] ". "CNET News.com", 2 September 1998.
*Swartz, Jon. " [http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/1999/01/09/MN19158.DTL CEO Quits Job Over UFO Views] ". "San Francisco Chronicle", 9 January 1999.
*" [http://www.encyclopedia.chicagohistory.org/pages/2901.html Whittman-Hart Inc.] " "Dictionary of Leading Chicago Businesses (1820-2000)". The Encyclopedia of Chicago.

External links

* [http://www.usweb.com/ USWeb homepage]
* [http://news.com.com/USWeb+looks+to+weave+a+success+story/2100-1017_3-221861.html CNET interview with Robert Shaw]