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AWise: The Mauling of MOL.com
By Andrew Ho
26/3/2001 7:31 am Mon
[Lagi satu syarikat yang gah bising pada awalnya yang
dikendung oleh Vincent Tan kian berciciran. Mol.com kini
dihenyak masalah dan mungkin terpadam dalam kebisingan juga.
Apakah rakan karibnya yang bergelar doktor itu akan datang
menghulurkan tangan? Sama-samalah kita memantaunya bukan
sahaja diwaktu malam, malah di ketika siang juga.
Nampaknya banyak sentuhan Vincent Tan berakhir dengan
kemusnahan yang memalukan. Yang peliknya mengapa doktor
masih tidak berhenti menyayang. Apakah ini satu pendidikkan
yang berwawasan yang mahu diajar kepada semua penuntut universiti
By Andrew Ho, AsiaWise
22 Mar 2001 14:30 (GMT +08:00)
Last March he announced he was taking over electrical manufacturing
company Dijaya Enterprise from his brother, renaming it MOL.com and
converting it into an investment and holding company focused on the
Internet. He said he expects it to become "the mini-Softbank of south
A month later the real Softbank entered the scene and announced it
would take a 10% stake in MOL.com for 103 million Malaysian ringgit.
That sent the stock price into orbit -- its 286% increase last year was
the best performance on the Kuala Lumpur Stock Exchange. The stock
started the year at RM 1.25 and peaked at RM 14.00. It currently
trades at RM 2.70.
All of this has generated a lot of press and a lot of investor interest but
so far not much else - results to date have been dismal. In the six
months ended December 31, the company posted an operating loss of
RM 13.8 million, compared with an operating profit of RM 2.5 million
last year. The net loss for the six months was RM 14.1 million and what
little turnover there was came mainly from the electrical equipment
business remaining from its previous incarnation.
What of the RM 260 million MOL.com poured into dotcoms and
strategic stakes in Malaysian, U.S., Hong Kong and Singaporean
software and e-solutions providers?
Consider Internet consultancy 1800assist.com and DotCC, an agent
for registering .CC domain names. They forecast revenues of RM 16
million and RM 40-50 million, respectively, in their first year of
operations, but MOL's December results fail to reveal significant
contributions from either subsidiary.
Even the Softbank deal hasn't been entirely positive. The investment
was announced in April and closed in September. Softbank ended up
with 11% of MOL at a cost of RM 68.1 million, largely due to the softer
Tan sold Softbank his personal shares and the RM 68.1 million that
flowed into his pockets has since been plowed back into MOL. The
latest balance sheet shows RM 106.2 million 'Due to a Director and a
Director of a Related Company' -- an increase of 69% from last year.
Other cracks began to appear late last year when Michael Soh, the
CEO of 1800assist.com, the cornerstone of MOL's Internet strategy,
resigned six months after joining the company. This was followed by
substantial layoffs -- numbers vary but start at 100 and rise from
According to a former employee, who spoke on condition of
anonymity, current employees number 70, down from a peak of 500.
As with the others laid off, he was given marching orders in November
with two months salary as compensation. Paul Ting, MOL's Executive
Director says fewer staff members were laid off, but admits there has
been a reorganization within MOL.
Although the numbers are in dispute, its clear that costs have been cut
-- at least in the form of staff salaries. Does that mean the worst is
over for MOL? No, says the former employee. He estimates that 80%
of MOL's 32 vortals (vertical portals) have either closed or will be
closed and he expects operations to be consolidated into one vortal
as the company tries to maintain its current service offerings.
We visited MOL's site, www.MOL.com, to get an idea of the situation
and two things struck us -- the slow speed and the postings by users
enquiring if the site was still live as there have been no updates of
Staying power is the key in today's environment and with funds drying
up for Internet investments, existing dotcoms have to dig in and start
relying on cash flows generated from operations.
How is MOL doing on that front?
The balance sheet paints a grim picture. MOL has a current asset to
liabilities ratio of 0.93x resulting from net current liabilities of RM 9.4
million. A current ratio of less than one implies lack of liquidity and
working capital -- no surprise, with short-term borrowings totaling RM
83.5 million and another RM 106.2 million in advances (read loans)
MOL's gearing is a hefty 1.5x -- and jumps to 3.4x if advances from
Directors are classified as long-term debt. With a paltry cash balance
of RM 3.2 million and negative cash flows from operations, banks are
unlikely to extend more credit.
Things are getting worse though. To date, MOL has merely reported
operational losses arising from the dotcom investments.
If it were to recognize losses on the former employee's estimate of 80%
of its investments, RM 208 million would disappear from its balance
sheet, wiping out MOL's current shareholder's funds of RM 54.7 million
and leaving it with a RM 153.3 million deficit in net tangible assets
MOL is likely to resist any write down of its investments since it could
result in their de-listing. Malaysia's Securities Commission requires
listed companies with negative NTA to top up shareholder's funds
within one year or lose their listing on the KLSE.
Despite what appears to be a state of denial at MOL, its days may well
be numbered given its faltering financial health. Its demise would
certainly rock the industry and earn headlines -- perhaps to the same
degree as its launch barely a year ago.