Last modified: November 11, 1996 12:15 PM PST
Can Pathfinder find its way?
Forrester Research is convinced Pathfinder is on its way out. The company recently issued a two-page brief in the wake of news that a third top manager will be leaving this year, warning that if Pathfinder doesn't change, and change dramatically, it will go the way of the dodo.
"They're losing managers right and left," said Bill Bass, the analyst who wrote the brief. "They're losing cash right and left."
Pathfinder insiders, all of whom spoke on the condition of anonymity, agreed that Pathfinder is disorganized and in trouble.
But Paul Sagan, outgoing Pathfinder president and editor of new media at Time, decried reports of Pathfinder's demise, saying they are false and without merit. He said Pathfinder is doing better than ever.
"[Pathfinder] is having a quarter of record traffic and record revenues," Sagan said. "A lot of the people who are unhappy are the so-called analysts with whom we don't do business.
"We see ourselves as on track and continuing to do better," he added. "To be blunt, these people don't know. They are analysts who make money [selling these reports]. We don't buy their reports; we don't share our proprietary information with them. They have no idea what our numbers are."
But Bass said his two-page brief is based on an intensive industrywide report completed in December and updated in May. "We do site visits," he said. "We go to their briefings. You can make very, very reasonably educated guesses about how much somebody's making."
His estimates don't bode well for Time Warner's two-year-old Web site. One of the largest and best-known on the Net, Pathfinder is losing money, lacks organization, and is suffering from management woes, Bass contends.
"Forrester estimates that Time Warner is losing at least $8 million annually on Pathfinder's operations, and there is no end in sight," the report states.
Sagan would not comment specifically on profitability except to say the Forrester numbers are wrong. Time Warner does not break out profits and revenues for Pathfinder.
Sagan added that all new media companies are losing money because they're funneling funds back into their fledgling businesses.
"The numbers are wrong," he said. "Our goal," he added, "is not to be making money this year. Our goal is to be investing and making it a business of scale."
The report goes on to say that media mogul Ted Turner, now Time Warner's largest stockholder since he recently sold his company to it, will probably want changes at Pathfinder as well.
"With the consummation of the Time Warner-Turner marriage [last month], Pathfinder will find itself being compared to CNN Interactive, one of the few profitable Web properties," the report states. "It is unlikely that Turner will allow Pathfinder to continue on its merry money-losing way."
The report also addresses the leadership upheaval at Pathfinder, including the company's latest resignation: Sagan. After less than a year on the job, Sagan submitted his resignation last month, saying he wanted to take a sabbatical to spend time with his family. His last day is December 20.
Sagan dismissed speculation that his departure indicates trouble within the organization or that, as a few insiders put it, he was forced out. "I find it amusing that people won't accept the simple truth," he said.
