Spike chases market across Asia

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What a year. Since last July, Australia's Spike Networks went public, then watched its stock price seesaw. Spike opened and closed an i-shop branch in the U.S. and moved Asian interactive agency holdings into a joint venture. Spike put part of its Internet radio station up for sale. The founder resigned, a venture capitalist took over and now the e-business services provider is getting down to work.

"It hasn't been boring," says John McGuigan, Spike's 50-year-old

executive chairman and venture capitalist-turned-boss.

After a chaotic year, Spike is focusing on building its Asian e-business services.

"We have a very laserlike focus on where we see the opportunity," says Mr. McGuigan. Asia "is an area where we see an undeniable demand."

The i-shop is taking the new name SpikeCyberWorks under a joint venture implemented this month between Spike Networks and Pacific Century CyberWorks. Spike, which becomes a holding company, owns 70%; Pacific Century owns 30%.

Hong Kong-based Pacific Century is building an ambitious Internet broadband network, Network of the World, and has stakes in more than 40 Web-related companies.


The joint venture employs about 200 people, with 150 in Australia and the rest in Japan and Hong Kong. During the next year, Mr. McGuigan says, SpikeCyberWorks expects to expand to 320 people through organic growth; acquisitions could make it grow faster. Over time, the venture hopes to expand across the region.

SpikeCyberWorks is positioning itself as a provider of Internet professional services with an emphasis on digital strategy and e-business applications.

Spike Networks also has an alliance with Arthur Andersen to offer e-business services in Asia-Pacific. Spike Networks lost $7.7 million on revenue of $4.4 million for the six months ended Dec. 31.

Jupiter Communications analyst Drew Ianni, who recently returned from an extended assignment in Australia, dubs Spike "the Razorfish of Australia."

Mr. McGuigan has a grander vision. "Our objective," he says, "is to be defined as the Razorfish of the Asia-Pacific region."

SpikeCyberWorks faces larger competitors, such as the Web Connection (See Page S-56). But Mr. McGuigan contends leadership in the services market is up for grabs.

SpikeCyberWorks has some good allies. Its largest client is Toyota, for which it tackles broad assignments ranging from business-to-business projects to consulting with the carmaker's global marketing group. And SpikeCyberWorks expects to field some projects for U.S.-based Web powerhouse CMGI, which has an alliance with Pacific Century.


There's no denying Spike Networks' roller-coaster ride during the past year. Spike Networks went public last July. In mid-June, the price per share was off 76% from the year's high.

Founder Chris O'Hanlon moved last year to Los Angeles to open a branch office and to launch SpikeRadio (www.spikeradio.com), a youth-oriented Web radio station.

Spike in March closed its U.S. i-shop to focus on opportunities in Asia. It also announced it would seek an equity partner for SpikeRadio, which has been suffering larger-than-expected losses. Mr. McGuigan acknowledges SpikeRadio doesn't fit Spike's new strategic focus, but says he'd like to retain at least a stake in the radio play. There is synergy: Spike Networks' largest client, Toyota, is the largest advertiser on SpikeRadio.

Mr. O'Hanlon in April resigned for health reasons and because, Mr. McGuigan says, "we needed a different style of management structure."

Mr. McGuigan -- former accountant, former global chairman of international law firm Baker & McKenzie, Chicago -- is an Australian venture capitalist who had invested in Spike Networks. He's running the company while he seeks a new CEO.

SpikeCyberWorks has no plans to return to the U.S., which Mr. McGuigan says required more resources than Spike initially had anticipated. The company could be attractive to U.S. marketers seeking an Asian presence, but the lack of a U.S. base could make it harder to attract and service clients.

But the Spike story is still unfolding.

Mr. McGuigan says SpikeCyberWorks would entertain alliances to be part of a larger network.

"The world's about scalability," he says. "We have an open mind to that alliance situation."

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