Business critique: iVillage, a network for women online.

The iVillage site is a great example of a true virtual community.

In one site, the creators have developed an interactive magazine for its target market - women.

The iVillage network, iVillage.com, provides an easy-to-use, comprehensive online network of sites tailored to the interests and needs of women using the Internet. iVillage.com consists of 14 channels organized by subject matter. The channels cover leading topics of interest to women online such as family, health, work, money, food, relationships, shopping, travel, pets and astrology. iVillage facilitates channel usage by providing common features and functionality within each channel, including experts, chats, message boards and services.

The site is a great example of the principles espoused in the book "Net Gain," by John Hagel III and Arthur G. Armstrong. The book’s basic principle, that successful virtual communities must be:

1. driven by a distinctive focus

2. have the capacity to integrate content and communication

3. have the appreciation for member-generated content

4. have access to competing publishers and vendors

5. have a commercial orientation.

The iVillage site touches on all these factors very well. It most definitely has a distinctive focus - its target market is women. The site offers chat rooms for women to discuss all sorts of issues related to women. The site caters to women and certainly has the appreciation of its customer feedback. The competition issue is a good one. If their competition is traditional news magazines, yes, they have access and as well as to that of other sites that may also attract women, but none as focused as this. The commercial orientation is met primarily by linking to other vendors as iVillage is primarily a resource for information for women.

COMPETITION
The primary product of iVillage is information. Can women find information elsewhere that interests them? Of course. So, the competition is immense but so is the target market.

COMPANY PRODUCTS
There is no tangible product other than the site itself. However, through strategic alliances and some deft use of fractal depth, the site is able to create opportunities for revenue. If you want to reach a lot of women, the best place for advertisers to go is to a women-oriented site.

FUNCTIONALITY/VALUE
The value of the site is primarily in the eye of the customer. The site is fairly "featury." But yet, the chat rooms offer a wide amount of information.

The key is, that to become a member, and thus, have the opportunity to chat, one must sign up with a user name and password and therefore be subject to the monitoring of the company. Therefore, while the service is free and access to information is unlimited, the site managers can monitor how long each member visits the site and what they are reading.

COMPANY'S VISION FOR THE NEW MILLINIUM
The Company has experienced a substantial increase in its expenditures since its inception. The increase in expenditures is consistent with the growth in iVillage's operations and staffing. The Company anticipates that it will continue to evaluate possible investments in business, products and technologies, and plans to expand its sales and marketing programs while conducting more aggressive brand promotions.

FUNDAMENTALS
The Company has a limited operating history and its prospects are subject to the risks, expenses and uncertainties frequently encountered by companies in the new and rapidly evolving markets for Internet products and services. According to a recent 10-Q filing, to date, iVillage's revenues have been derived primarily from the sale of sponsorship and advertising contracts. Sponsorship and advertising revenues represented 73% of total revenues for the three months ended March 31, 1999.

The Extent to Which the Company has been a Success in the Marketplace (Relative to Its Major Competitors)

Source: S&P Personal Wealth

BUY RECOMMENDATION
We would recommend a moderate buy on the stock for investors looking for growth stocks to go in their portfolio. Expected annual increase in operating earnings over the next full business cycle (3-5 years).