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To: Susan G who wrote (113827)	9/14/2000 5:25:35 PM
From: ColtonGang	Read Replies (1) \| Respond to of 120523

VerticalNet Reorganizes By Joe Bousquin Staff Reporter 9/14/00 11:27 AM ET One B2B business apparently isn't enough. So VerticalNet (VERT:Nasdaq - news) is making itself into three. The Horsham, Pa.-based company, which runs Internet communities for industry professionals, said Thursday that it's reorganizing itself into three distinct business units so it can serve customers better. The move comes a week after VerticalNet said it wanted to get serious about B2B. It also is one of the first major moves by new CEO Joseph Galli, who joined the company from Amazon.com in July. Wall Street has questioned whether VerticalNet, which generates most of its revenue from more traditional businesses, is enough of a true online business-to-business venture. The new structure could highlight the company's various B2B efforts since over time each unit will be accountable for its own financial performance. The reorganization segments the company into a troika of interrelated parts. VerticalNet Markets will continue to run the company's 57 core Internet communities, while VerticalNet Exchanges will focus on the buying-and-selling part of the business, chiefly the company's NECX computer chip exchange. VerticalNet Solutions will operate as a technology unit to make money off the software that the company has built and bought in the past. The company also will use its software in its VerticalNet Exchanges unit. VerticalNet, along with companies like Ventro (VNTR:Nasdaq - news) and FreeMarkets (FMKT:Nasdaq - news), has been stressing lately how it can make money licensing the B2B software it has developed. "We believe that operating as three strategic business units will makes us a stronger, more cohesive and more competitive company in total," Galli said in a statement. But VerticalNet also is battling the fact that traffic to its online communities has been light, according to Media Metrix. Earlier this week, Wedbush Morgan Securities analyst George Santana published a scathing report on the company, questioning whether its 57 Web sites could possibly justify the company's then $4.2 billion market capitalization. Based on its share price at the time, those sites were worth $60 million a piece, Santana calculated. (He rates the company hold, and his firm hasn't done underwriting for VerticalNet.) That's a lot more than what VerticalNet paid to acquire many of them. Since September 1998, for instance, the most the company paid for any one site was $12 million, when it bought GovCon in December 1999, Santana said. But many sites, like safetyonline.com, were snatched up for less than $1 million. "Maybe there's value in those sites if they're generating traffic and revenue, but when we looked at the visitors to them, they were very light," Santana said in an interview. "I mean, 3,000 unique visitors to textileweb.com per month? I'm not sure that's worth $60 million." Investors haven't been sure, either. Over the last week, VerticalNet's shares have tumbled 17%, in part because rumors spread that it was looking to buy beleaguered exchange company Ventro. But VerticalNet put out that fire Tuesday night when it called the rumor completely false. Maybe that, and the reorganization of the business, has helped. VerticalNet's shares were rebounding with the rest of tech on Thursday. It was up $2.06, or 4.7%, to $45.94. --------------------------------------------------------------------------------