VerticalNet Unable To Silence Critics
Nov. 30, 2000 (InformationWeek - CMP via COMTEX) -- VerticalNet Inc. hoped the
strong third-quarter revenue it reported last week would bolster confidence in
the business-to-business marketplace company, but the results haven't silenced
criticism. The company is still under fire for generating most of its revenue
from advertising and offline business and for not doing enough to enable
customers to do business on the Internet.
VerticalNet (VERT-Nasdaq) posted net revenue of $73.7 million, a 38% increase
from $53.6 million in the second quarter, and a loss of 20 cents per share, down
from 23 cents in the second quarter. Although sales growth was strong, it's the
source of that revenue that sparks the criticism. More than half, $39.3 million,
came from NECX .com, an electronics component-brokerage firm acquired by
VerticalNet. But most of NECX.com's revenue comes from traditional offline
brokerage work; only $2.4 million came from online transactions. Almost
one-quarter of VerticalNet's revenue-$17 million-came from online advertising,
while $17.5 million came from E-commerce, which it earned from selling Internet
storefronts on the 57 online marketplaces it owns.
Last month, VerticalNet revealed it's reorganizing under three lines of
business: building and operating online marketplaces, operating NECX.com, and
selling E-business software. It faces tough competitors on all fronts. "They're
not focused on what they want to do," says Carl Lenz, a Gartner Group analyst.
Meanwhile, FreeMarkets Inc. (FMKT-Nasdaq) showed that even focused companies can
lose money. The company, which organizes private reverse auctions for industrial
materials and supplies, said last week its third-quarter revenue hit $26.6
million, up from $5.4 million a year ago. But its operating loss, excluding
several noncash charges, was $12.3 million, or 33 cents a share. |
