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Technology Stocks : Internet Capital Group Inc. (ICGE) -- Ignore unavailable to you. Want to Upgrade?

To: puborectalis who wrote (1441)	3/15/2000 6:50:00 AM
From: puborectalis	Respond to of 4187

ICG Commerce gets Sunoco deal The Jenkintown firm, catching the Internet wave, will take on $1.4 billion in annual purchasing for the oil giant. By Miriam Hill INQUIRER STAFF WRITER ICG Commerce, of Jenkintown, will announce today an agreement to handle $1.4 billion in yearly purchasing for Sunoco Inc. The deal with the Philadelphia oil giant is a coup for ICG Commerce, which has added 250 employees in the last 90 days as part of an aggressive business strategy. "We want all the world's purchases. Period," ICG Commerce chief executive Rick Berry said. "We won't stop until the whole world is covered." For Sunoco, which had $9.9 billion in sales last year, ICG Commerce will manage nearly all purchasing from staples to computer systems - everything but the oil and other raw materials for its refineries. ICG Commerce is half-owned by Internet Capital Group Inc., of Wayne, which invests in companies that help businesses buy and sell goods and services to other businesses on the Internet. ICG Commerce acts as a huge buying club for corporations. It pools purchases from companies such as Sunoco to win lower prices from suppliers. It also analyzes purchasing practices to find other savings. A company might be able to get a lower price from a printer, for example, by using fewer colors in publications. And with software from two other Internet Capital companies, RightWorks and CommerceQuest, ICG Commerce plans to use the power of computers to help businesses cut better deals with suppliers. Berry's company, called Purchasing Group Inc. before it went high-tech and morphed into ICG Commerce, has been helping corporations cut their costs since it was founded in 1992. But at a Harvard business school reunion last year, all of Berry's classmates were talking about venture capital and the Internet. "I don't know whether it depressed me or energized me, but that weekend I sat down and wrote out a business plan." He sent it to Internet Capital Group, which invested $12 million last fall. The ICG Commerce business model would seem to be in competition with some of the 57 other companies in which Internet Capital Group has invested. VerticalNet Inc., of Horsham, for example, operates online marketplaces for various industries. VerticalNet's executive vice president, Michael Hagan, said he was still learning about the ICG Commerce model. "It could be competitive or it could be complementary," Hagan said. Internet Capital Group managing director Doug Alexander said ICG Commerce complemented the other companies by driving purchases through them. Just a year ago, Berry employed 40 people, but he's been on a hiring spree, adding executives from such companies as SAP America, KPMG Peat Marwick L.L.P. and Coca-Cola Co. He plans to take his 300-employee company public in September, and boldly predicts that it will be a Fortune 500 company managing $300 billion in corporate purchases in three to five years. Sunoco already has invested in ICG Commerce, giving it a stake in the company's success. "They offer a unique and total solution that will help us achieve significant cost savings, ultimately leading to enhanced profitability," Sunoco spokesman Gerald Davis said. Berry estimates that he can save customers 10 percent to 25 percent on their purchases. ICG Commerce gets a 5 percent cut of all sales it processes. However, creating business-to-business e-commerce markets may be tough, and potentially not all that profitable, some academics say. "In some cases, the big companies have a lot of power. These customers have a huge say in how much business flows through these little companies and their e-marketplaces," said Vish Krishnan, an associate professor at the University of Texas at Austin who studies e-business innovation. "Whenever expectations for change are this high, disappointments are bound to be on the horizon."