Interfoods

Many companies are embracing the Internet by launching a Web site to market or even to sell their wares. But an Encino firm is embracing the Internet in a far more significant way. Interfoods Consolidated Inc., a two-year-old food holding company, has decided to dump all its food-making operations and reinvent itself as an Internet firm. The company even has taken a new name, Sitestar.com, after the small Annapolis, Md.-based Internet service provider, Sitestar Corp., that it acquired in late July. “We’ve been looking at high technology for several months,” said Eric Manlunas, company chairman. “We saw a lot of compelling opportunities, especially in Internet sites.” The dramatic shift comes despite a recent improvement in the financial performance of the company’s food operations. Interfoods Consolidated, a small-cap public company whose shares are traded over the counter, reported net income of $45,473 for its fiscal fourth quarter ended April 30, up from a net loss of $20,163 for the like year-earlier period. Revenue was $3.5 million vs. $2.2 million. Nonetheless the company’s stock has continued to languish. It closed at $1.63 a share on Sept. 2, much closer to its 52-week low of $1 than its 52-week high of $4.13 a share. To jumpstart the stock and earnings, shareholders voted to sell off the company’s two operating subsidiaries, gourmet food-maker Holland American and Mexican food unit Sierra Vista Foods Inc. The two divisions together generate a total of about $10 million in annual sales. In describing the company’s dramatic shift from food to the Internet, Manlunas said, “They’re two different industries, we know. We’re going to apply our same philosophy to the Internet as we did to food, which is to buy and build.” Soon after buying Sitestar for an undisclosed amount, the company also purchased Soccersite.com, a Web site featuring soccer news and information, plus a retail component where fans can shop for items related to the sport. Sitestar also intends to buy more Internet service providers in the Mid-Atlantic states, along with e-commerce start-ups. Sitestar officials say they have no plans to get involved in day-to-day operations of the Internet companies and instead will retain current management at the firms being acquired. With a total of eight employees, the Sitestar ISP offers high-speed Net access and hosts Web sites. “We’re not technical guys, and we don’t want to step out of our roles,” said Clint Sallee, Sitestar president and chief executive. “Our skills are investment, finance and acquisitions.” Cliff Numark, executive director of the Los Angeles Regional Technology Alliance, a trade group for local tech companies, said it’s becoming common for firms to seek online opportunities. But he pointed out that it’s usually retail firms or utility companies that expand to the Internet. “Generally they do it in their same line of business,” said Numark, noting that switching from the food industry to Internet service is one of the more dramatic transitions he has seen. “Basically, they’re just starting a new business,” Numark said. “It’s certainly not a bad thing. But every organization is about the people in it. You want to make sure the skill base is adapted and thrives in the Internet market.” Manlunas knows the changeover will pose challenges, but he believes it will benefit stockholders in the end. “In our mind, it’s very clear what we’re doing,” he said.