VerticalNet Purchases Exchange

By Renee Boucher Ferguson  |  Posted 2001-03-05

VerticalNet Inc., a company that in the past few months said it would move away from the business-to-business exchange model to focus on becoming a software and services provider, late last month said it is buying another exchange.

Commerx Inc., an e-business software and networks provider, announced that it is divesting its online exchange for the plastics industry, The buyer is VerticalNet, of Horsham, Pa.

Commerx, of Westchester, Ill., launched last summer as an entree into B2B trading with high hopes of linking plastics suppliers, processors and OEMs in an exchange environment. Just as VerticalNet said it would do last fall, Commerx officials last month said their company is transitioning from that transaction-based model back to delivering supply chain automation solutions and networks.

In January, VerticalNet took steps to re-enforce its identity as a software developer by cutting 150 jobs, about 8.3 percent of its work force. Most of those cuts were in sales and marketing and designed to reduce redundancies created by the 20 company acquisitions VerticalNet had made in the past two years, company officials said at that time. Late last year, the company sold its profitable exchange, NECX, to Convergence Holdings plc., an electronics marketplace.

VerticalNet is showing signs of successfully moving its business toward software. Revenue for VerticalNet Solutions, the companys B2B software division, grew to $6.1 million in the quarter ended Dec. 31, from $900,000 in the preceding quarter.

But VerticalNet hasnt turned its back on exchanges. The company still owns 58 other vertically aligned marketplaces to which it provides technology. Co-founder Michael Hagan, who replaced Joe Galli as CEO in January, said he wants VerticalNet to operate e-marketplaces in 70 vertical markets within the next few years.

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