"CEO interview," courtesy of "michael_logan2000," posted 1/20/00 11:02 am on yahoo!.
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CEO interview
by: michael_logan2000 1/20/00 11:02 am
Msg: 5181 of 5188
VARNEY: This next e-commerce play was actually the worst- performing Net IPO of 1999. Value America. The company debuted on Wall Street last spring amid huge fanfare, but problems with a new computer system and frequent customer complaints took their toll, and the stock tumbled from a high of $74. The last time Value America's chief executive appeared on MONEYLINE, she outlined a turnaround plan to change the company's focus from business-to-consumer sales to business-to-business. I spoke with Glenda Dorchak again recently and began by asking her if she is implementing that plan.
GLENDA DORCHAK, CEO, VALUE AMERICA: We're focused on ensuring that we focus on a core set of products that today give us 95 percent of our revenue and that we can execute in the way that gives customers the best possible service.
VARNEY: What was the major lesson that you learned from the difficulty that Value America went through at the latter part of last year?
DORCHAK: I think the diffusion of focus across a number of different categories, a number of different customer segments show that it's really important, when your customers value you based on your performance and service, that you do things only that you're able to execute well on. And we spent far too much time repairing problems in a small segment of our business and not enough time focusing on where our core competencies lie.
So it was a learning experience.
VARNEY: Is there anything wrong with your basic business model? And by they mean, I think you're an e-tailer that doesn't have inventory. You deal directly with suppliers, if I'm not mistaken. Is that still part of the business plan?
DORCHAK: Not only is it part of the business plan; it was the core -- core -- what I thought is the model for us to go forward with. It gave me the confidence that the business could be very competitive going forward.
Having an inventory-less model allows you to not only have the most recent version of products for your customers, but get them to them as quickly as possible, as opposed to if you're selling out of warehouses. As you see changes in your business occur, you don't have the opportunity to go to new waves of product. You have to wait and sell off what's there. It gave us the ability to be a lot lighter on our feet financially and a lot more competitive in terms of product for the customers.
(http://messages.yahoo.com/bbs?action=m&board=18185302&tid=vusa&sid=18185302&mid=5181)
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cont
by: michael_logan2000 1/20/00 11:04 am
Msg: 5182 of 5188
VARNEY: I am told that have you somewhere in the region of $100 million cash still on hand, but that you're going through it at the rate of 10 million a month. Is that still accurate?
DORCHAK: When we declared financials for the end of the third quarter, we had approximately 115 million, and that was approximately the run rate. And the run rate now that we've now, under this restructuring plan, unfolded is approximately half that -- half that run rate and allows us obviously a much longer period of time to evaluate any capitalization requirements.
VARNEY: You pulled back on the advertising then, have you?
DORCHAK: Well, absolutely. So our expenditure controls have gone far beyond just looking at the people we've got, but looking at advertising and doing it in just the categories where we perform well. And that was an important lesson we learned this last year as well.
VARNEY: But what I'm getting at here is that you are running through the cash on hand and you're not going to get any more cash, which puts a sort of a time frame on the turnaround possibilities for your company. You've got a limited amount of time to use the money that you've got available and no more. That's it.
DORCHAK: Absolutely. We are managing cash and managing it frugally so that we have the greatest amount of time to evaluate the options. And that's why we have a special committee that's run by Frederick Smith of Federal Express to evaluate what those opportunities are.
The difference in Value America today than two weeks ago is that we now have a long period of time in the year 2000 to evaluate that, and as we restore our business performance financially, we're able to look at all sorts of different options for partnering, capitalization, alliances.
(http://messages.yahoo.com/bbs?action=m&board=18185302&tid=vusa&sid=18185302&mid=5182)
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cont2
by: michael_logan2000 1/20/00 11:05 am
Msg: 5183 of 5188
VARNEY: You are basically for sale, are you not?
DORCHAK: I believe right now we're looking at any option that we've got, including potentially corporate partners and corporate parents. But I think right now what we're doing is making sure that we're running our business well so that whoever is looking at us, as we partner -- as we perform with our customers, whoever is looking at us is seeing us as the strong e-tailer that we can be, either in partnership or in acquisition.
VARNEY: Paul Allen was one of the original investors in Value America. Do you have his confidence with your current strategy?
DORCHAK: Confidence and great support. Bill Savoy, who is in charge of his investment company, Vulcan Ventures, is actually on our board and is on our special committee, looking at the opportunities for Value America's partnering down the road. They've been immensely supportive as have been our other board of director members.
VARNEY: Are you looking for an alliance, a partnership or a sale within the next six to nine months?
DORCHAK: I wouldn't say that we're looking for a sale to come within the next six months. I'd say right now, certainly in terms of running the business, I'm focusing on just making it run well.
I will tell you the special committee is actively involved, and they're look at opportunities going forward today, and will throughout the year, until the right opportunity presents itself to make sure that we have financial funding going through the year 2000.
And of course, I want to emphasize that the plan we have submitted to our board of directors is premised on a very strong path to profitability. So we do know how to get to profitability in the year 2001, and that's what I'm intently focused on from now until the end of the year.
VARNEY: Glenda Dorchak of Value America, we thank you very much indeed for joining us today on MONEYLINE.
Thank you, ma'am.
DORCHAK: Thank you, Stuart.
(http://messages.yahoo.com/bbs?action=m&board=18185302&tid=vusa&sid=18185302&mid=5183)
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thank you michael. |
