[ga] Fw: idea lab

["Ken Stubbs" <kstubbs@digitel.net>]

fyi ...i believe  this company  is the "new.net" parent

 

	Investors Sue Idealab for $1 Billion and Call for Liquidation

by Ben Fritz Some of idealab's biggest investors, including Dell USA, T. Rowe Price Science and Technology Fund and entertainment mogul Jeff Berg have filed a lawsuit against the Pasadena-based incubator and its top executives and board members, claiming mismanagement is cheating them out of the approximately $1 billion they poured into it. Specifically, this high-profile group of investors from idealab's series B, which took place just six months before the company had planned for an IPO, are alleging "abuse of authority and self-dealing" and asking for $1 billion in damages, as well as for idealab's court-ordered dissolution. The suit claims that idealab's "'incubator' business is, for all practical purposes, non-existent" and alleges that founder and CEO bill gross and his fiancée, company President Marcia Goodstein, are keeping the operation intact only to benefit financially from salaries and perks. The best course of action for idealab's minority shareholders, it claims, would be for the company to dissolve and distribute the approximately $500 million it has remaining to shareholders. "They have told us they plan on taking the cash proceeds from idealab and simply operating for the next few years," said Skip Miller of law firm Christensen, Miller, et al, which is representing the plaintiffs. "The whole company has really run its course. It's time to fold." "The whole company has really run its course. It's time to fold." -Skip Miller, Attorney for Plaintiffs In a statement, idealab called the allegations "baseless" and blamed the decline in value of idealab shares on the overall market, saying, "These sophisticated investors made an investment two years ago, and now, after a market collapse that has affected millions of Americans, they are attempting to use litigation to rewrite the terms of their private investment." idealab spokesperson Teresa Bridwell also responded to a number of allegations, including that Gross used the company to collateralize personal loans and the firm did not fully disclose its financial status to investors. She noted that Gross invested most of the personal loan into idealab's series B on the same terms as the plaintiffs and vigorously disputed the claims of non-disclosure, stating, "We take our fiduciary responsibilities very seriously and have sent out quarterly mailings with financial statements as well as having meetings last march in L.A. and April in New York with preferred shareholders." Miller described the information provided as "a little bit" and "very vague." Angry investors, including many of the plaintiffs, had previously asked idealab for a portion of their cash back and the incubator recently offered 10 cents on the dollar to those who participated in the series B. Bridwell said approximately 10 percent of investors took advantage of the offer, which closed last week. "These sophisticated investors ... are attempting to use litigation to rewrite the terms of their private investment." -idealab statement Once the poster child for quick Internet riches, idealab has unsurprisingly suffered in the past year, seeing many of its high-profile companies, like eToys and eMachines, falter. Unlike some of its competitors, however, idealab has had one huge hit, Overture (Nasdaq: OVER), with a few other companies still in operation, including CarsDirect, the Vendare Group, and NetZero (now United Online). idealab has had only one high profile launch in the past year: New.net. Contrary to claims in the suit that the company has few remaining ventures in development and they require little of its remaining cash, Bridwell said idealab has been focused on incubating technology companies not related to the Internet recently, and plans to launch a number in the coming months. "They will have qualities our earlier companies didn't, like patentable technologies and higher margins," she stated. "But those take longer to develop. We acknowledge that the days of creating companies in a few months are over."

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