Last chance saloon for Lastminute.com?

FLOATED in a blaze of publicity at the turn of the century, the brainchild of glamorous young entrepreneurs Brent Hoberman and Martha Lane Fox was set to revolutionise the way we buy holidays.

But five years on, internet travel group lastminute.com has racked up big losses. It has expanded through buying traditional bricks-and-mortar businesses and a succession of managers have quit. Now the company says there is a City dirty tricks campaign to drive down its share price.

An anonymous fax claiming lastminute.com is facing its last days has been circulated in recent weeks. Headlined 'Running on Empty', it says lastminute.com has run out of cash, margins are being squeezed and a big fundraising may be necessary.

All rubbish, according to Hoberman, who hit back this weekend by telling Financial Mail that lastminute.com would move into the black this year. 'We have very strong cash generation and our core lastminute brand grew 58% in value terms last year to take sales to £500m,' he said.

The company is also picking up new contracts and is about to announce that it will sell flights for Air France.

Hoberman said short sellers - investors who sell shares in a company in the hope of buying them back cheaper later - had targeted his company in the wake of results this month that showed losses of £26m in the quarter to December 31, traditionally the group's weakest period.

But it was never going to be plain sailing for lastminute.com, whose present share price of 108p is well below the heady levels of its dotcom bubble days. At least one major investor - Standard Life - has drastically cut its holding.

So what has gone wrong for the former dotcom darling? Insiders say the crux of the problem has been the attempt to integrate all the different businesses bought by lastminute.com.

The company quickly realised it could not be profitable on its own, so it bought a dozen firms, including Med Hotels, which sells accommodation in the Mediterranean, and car rental broker Holiday Autos. Many managers have been exasperated by the task of making all these businesses work together. Joint founder Martha Lane Fox and former chairman Allan Leighton head a long list of people who have quit.

One former manager said: 'It is not a happy ship. In fact, it is complete chaos. We were buying all these companies and the left hand did not know what the right hand was doing.'

Another said: 'Lastminute.com has tough competition from lots of websites, so it decided to buy other companies and generate bookings by selling its holidays through travel agents.

'It all sounds very plausible, but it is really an admission that the original model does not work.'

Hoberman says he is happy to sell through whatever channels customers want to use. And as the largest individual shareholder, he insists he would quit if he believed he no longer had the skills to drive the business forward.