March 3, 1999 2:45 PM PST

PointCast CEO looking to greener pastures?

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PointCast pushes ahead with Net venture

February 25, 1999
If PointCast CEO David Dorman departs to head up an AT&T and British Telecommunications $10 billion joint venture, he will leave behind close to $2 million in bonuses this year, according to PointCast proxy statements.

But the move would likely bring Dorman to greener pastures anyway, since the vast bulk of his PointCast bonuses depend on events that appear increasingly unlikely.

Sources close to the situation say that Dorman, who has been wooed heavily by AT&T and BT, has not yet officially signed on to head the joint venture. But that could change quickly.

According to a report in the Wall Street Journal, AT&T and BT are likely to give Dorman a base salary of more than $1 million, and about $500,000 in stock options.

That's a considerable jump from Dorman's salary of $250,000 at PointCast, as listed in documents filed last year with the Securities and Exchange Commission.

Dorman is slated to get quarterly bonuses this year totaling at least $250,000. But the company also offered a $1.8 million cash prize if he is able to raise PointCast's subscriber membership to 3 million by the end of the year--and bring the company's operating income into the black.

The company's current subscriber figures, at least, look bad for the CEO's bonus.

The company's Web site today touts "more than 1.2 million" users, which is the same figure the company was touting as far back as a year ago. Unless PointCast succeeds in jumpstarting its stagnant subscriber growth--which could happen if a pending joint venture with telephone companies goes through--reaching that 3 million benchmark appears unlikely.

Dorman originally joined PointCast with the intention of taking the then-hot Internet company public--which would give him another handsome reward in the form of stock options. But plans for the public stock offering fell apart last summer, as the company cited it wanted to explore talks with strategic partners.

The AT&T-BT deal holds other enticements beyond the money, however. The $10 billion joint venture marks the two companies' best hope for expanding their presence worldwide, and if successful, could give the pair the dominant role on the world stage that they now hold in their home countries.

By signing up, Dorman could potentially even put himself in line to one day take the helm of AT&T itself.

Bad news for Baby Bell alliance?
Meanwhile, the news that Dorman may be close to jumping ship raises questions about PointCast's plans to create its own alliance with a coalition of Baby Bell telephone companies.

Since December, the Internet company has been in talks with local phone companies to create a joint venture that would link PointCast's content and "push" technology with the Baby Bells' high-speed Internet services.

The deal would give the Baby Bells content for their developing DSL services, and could create a high-profile, high-speed Internet access service to compete with cable-based companies like @Home.

But PointCast's other selling point was Dorman, who was CEO of Pacific Bell before that company was bought out by SBC Communications in 1996.

Sources said that the PointCast deal with the telcos, which has been tentatively dubbed "Project Newnet," is close to happening with or without Dorman's inclusion.

But Dorman's departure would leave PointCast and the budding joint venture without a high-profile CEO with roots in both the Internet and telco worlds. It remains to be seen if that will sour the deal with the Bells, who have had trouble breaking into the Internet world on their own.

"After four months, I would hope they're far enough along that the cost of stepping back is higher than the cost of going forward without Dorman," said Ron Rappaport, an industry analyst with Zona Reseach. "But that's their call."

 

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