Divine stock struggles

By Michele Fitzpatrick  Tribune Staff Writer  September 21, 2000

Divine Interventures' stock closed at $5 after hitting a new low Wednesday afternoon.  The stock price at its low was $4.94 a share, from a start for the day of $5.81. Divine was offered at $9 in its July 12 opening on Nasdaq.  In a busy day for tech stocks, trading volume in Class A shares of the Chicago Internet incubator was 466,300 shares, 3 percent of shares outstanding.  Given the local tech incubator's recent challenges, the drop didn't surprise George Nichols, a stock analyst specializing in IPOs and the Internet for Morningstar.com.  "The company faces challenges greater than many because such a large percentage of its assets are tied to private companies, and those companies are very early start-ups which haven't shown a profit," he said.  Nichols referred to a Divine prospectus filed in March that indicated 30 out of 52 of its companies were not generating revenue and that the majority of those companies were losing money.  "The VC market has languished since March," Nichols said. "Divine is a recent IPO that can't get out of the starting gate … while investors are looking to see it generate profit. (Divine) invested money into cash-burning ventures, (doesn't) have a proven track record, and investors are waiting to see if they can deliver."  Nichols said he had no evidence to link the stock's dip to Monday's announcement of the departure of Divine's president, Scott Hartkopf, and chief operating officer, Lynn Wilson.  "I suspect it (the drop) is a morale-deflator to Divine employees, for whom stock options are an incentive," Nichols said.