Incubator Or Incinerator?

Chicago's relationship with Internet incubator Divine interVentures (DVIN) began as a heavenly affair. Riding high on the popularity of business-to-business Net companies last year, Divine was the belle of Chicago's dot-com ball, and the company's enigmatic chairman and CEO, Andrew J. "Flip" Filipowski, was praised as the city's Great Wired Hope. When Chicago Mayor Richard M. Daley laid out his blueprint for turning the city into "the high-tech hub of the 21st century," he chose the site of Divine's planned seven-acre campus on the city's North Side to deliver his speech. Daley chipped in a $14 million tax subsidy to help the project along and tapped the company to manage a planned $100 million venture fund for local tech startups.

These days, Filipowski is looking anything but divine. His fall from grace started earlier this year when his company's much-anticipated initial public offering turned into a fiasco. Divine suffered a four-month delay in its offering that included the dumping of its lead underwriter, Credit Suisse First Boston, and a run-in with the Securities & Exchange Commission. The latter was triggered when Filipowski gave financial information to the media that conflicted with Divine's own IPO documents. When the offering was finally completed in July, the company raised $128.6 million, instead of the $460 million it had hoped for. Divine's troubles have only worsened since then. After selling shares in its IPO for $9 each, the company has seen its stock plunge to about $3. "The stock performance looks like a disaster," says analyst George Nichols of mutual fund researcher Morningstar Inc. And Divine's plan for a tech campus? It has been put on hold.