Dot.com Companies in Europe show Signs of Recovery 12/10/2000 New findings from a recent report, "PricewaterhouseCoopers Internet 150", show that Internet company ‘burn rates’ have improved across Europe with the average rate being 20 months, an improvement of 7 months since the end of last year. The research and analysis, conducted jointly with Fletcher Advisory, covers the top 150 publicly listed European Internet companies with a combined market capitalisation of Euro 200bn. It reveals that burn rates (the length of time that a company can survive before needing additional cash) have improved significantly, although pockets of the sector are still particularly exposed. Despite an improvement in the average 'burn rate', the 20 most vulnerable Internet companies in Europe are at risk of running out of cash within a year, unless direct measures are taken to address the issue B2C companies are most vulnerable, with an average burn rate of 15 months compared to 24 months for B2B firms. This difference stems from continuing high marketing expenditure by consumer facing firms which, in some cases, equates to more than 400% of gross profit Significant sector differences exist. The service and e-commerce sectors are the strongest, containing the most profitable companies with no burn rate. In contrast, the content and software sectors are the weakest, containing the highest number of ‘burning’ companies German companies are somewhat more secure than their UK counterparts. 50% of German Internet companies in the survey are profitable, whereas only 26% of the British firms are making a profit The research builds on similar analysis published by PricewaterhouseCoopers in May 2000 covering the UK market only. According to Kevin Ellis, a partner at PWC, "Against a couple of high profile insolvencies, Internet companies are waking up to the fact that the dot-com honeymoon is over. What we’re witnessing is dot.coms throughout Europe beginning to take proactive steps to consolidate their position and regain the confidence of the market, including fundamental business restructuring or seeking appropriate merger partners. On the whole, the improving burn rates indicate that management teams are focusing not only on cash management but also on bringing forward their breakeven points to take control of their own destinies". The report also indicates that Germany is becoming the dominant Internet economy in Europe accounting for 45% of the whole market capitalisation, 56 of the top 150 companies and 34% of the funds raised since the beginning of 2000. The UK ranks second (with 35 of the top 150 companies and 16% of the market capitalisation) followed by the Netherlands and France.