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Kazoo3D looks likely to fall prey to a takeover after admitting that its Web site has been performing below expectations

Kazoo3D looks likely to fall prey to a takeover after admitting that its Web site has been performing significantly below expectations since its launch on 29 August last year.

It's reviewing all strategic options to find 'alternative ways to monetise the offering', but chief executive Stuart Green admitted that a takeover 'is the more likely option' at this stage.

Kazoo planned to tap the consumer digital imaging market with its Web site of 3D content. 'We'd done a lot of market analysis,' said Green, both specifically commissioned and by looking at research by Infratrends, which had 'forecast very bullish trends for the take-up of ancillary digital services'. But Green admitted the market is not as large as was originally anticipated.

Click-through rates and conversion rates of visitors to customers have both been extremely disappointing since the site launched in August last year, but Green declined to detail revenues to date.

The company is in talks with a number of other firms, both US- and UK-based, which Green predicted would be concluded within a month. He declined to name those involved, but confirmed they included existing partners.

Should the talks prove unsuccessful, Kazoo may return funds to its shareholders. Overheads have been trimmed but there have been no lay-offs as yet. With cash of £6.9m at the end of 2000, there should be no problems in paying creditors.

Questions may also be raised over the decision to float in March 2000. Green admitted that the 'volume of trades has been tiny', but defended the move, saying, 'At the time it was an effective way to move the business forward.' Kazoo releases annual results in late February.

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Published 8 February, 2001 by NMA Staff

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