July 18, 2001 12:50 PM PDT

PhotoPoint returns to original creators

Troubled online photo site PhotoPoint has been acquired by Pantellic Software, a privately held Canadian company that created and spun off the company during the Internet boom.

Financial terms of the deal were not disclosed.

The announcement follows a recent outage on the site that left customers in the dark for approximately five days.

Customers complained that the site was unavailable and that no messages were posted informing them of the outage.

Suzzana Ellyn, a research analyst for La Jolla, Calif.-based ARS, said the acquisition comes at no surprise. But she criticized PhotoPoint for its lack of customer service. The company hasn't been "good at communicating changes in their services to their customers," she said.

Online photo companies have been on shaky ground, forming affiliations with other companies to stay afloat or completely folding up shop. Last month, photo giant Eastman Kodak acquired online photo site Ofoto. The following week, Zing.com said it would close its consumer operations to become an infrastructure provider and laid off 10 to 15 employees out of a total of 56.

Having raised $11 million from venture capitalists nearly two years ago, San Francisco-based PhotoPoint has recently been struggling with debt. Instead of filing for bankruptcy, the company did an assignment for the benefit of creditors, making Sherwood Partners responsible to sell its assets.

Martin Pichinson, a founder for Sherwood Partners, said PhotoPoint shut down and the staff was laid off two weeks ago.

PhotoPoint "was insolvent; there was more going out than comes in," Pichinson said.

Despite the shakeout in the online photo space, Pantellic Chief Executive Dale Gass said he remains confident about the business, adding that the photo industry will continue to grow, especially on the digital side.

"We plan to focus upon building an incremental, stable profitable business from the start," Gass said. "We wouldn't have entered into this if we didn't know we can make this a profitable business in the short term and the long term."

 

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