Out-Law / Your Daily Need-To-Know

Shares in some of the leading UK-based internet companies fell dramatically this week in response to reports that Amazon.com, the US internet retail giant, is running out of cash.

Amazon's share price fell by around 20% following the publication of an analyst’s damning report last week. This led to fears about the future of on-line retail stocks in general and the effect of this was felt in the City yesterday.

Share prices in UK based on-line auction house QXL.com and travel specialist Lastminute.com fell by 9% and 3% respectively. More notably, shares in the UK's leading ISP, Freeserve, dropped by 19% by mid-afternoon.

Freeserve’s substantial loss has been attributed to the collapse of talks between the company and T-Online, part of Deutsche Telekom. It is understood that the deal was abandoned because agreement could not be reached over management styles and rates of pay. Despite this set back Freeserve chief executive John Pluthero maintained, “we are still in talks with a number of others”.

It is widely believed that cable company NTL is now holding merger discussions with the company. In the wake of this, Freeserve released its annual results a day earlier than expected which showed losses of £19.7m, although the number of active registered accounts has risen from 1.2 to 1.9m.

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