VerticalNet, which recently set a new corporate direction, now has a new driver to take it down that course.
Having sold off its most successful exchange and positioned itself to compete as a software vendor, the Philadelphia-based marketplace operator said last week that its chief executive, Joseph Galli, was leaving to become CEO of housewares maker Newell Rubbermaid. Galli joined the e-marketplace company just five months ago, coming from Amazon.com with a $4 million signing bonus.
Wall Street initially pummeled VerticalNet on the news. The stock dropped 25 percent, from $5.31 per share on Jan. 5 to $3.50 on Jan. 8. The stock rebounded to just $5 per share by midweek.
Founder Michael Hagan, who has been acting as chief operating officer for more than three years, will return to the CEO slot. Hagan denied that the company will skip a beat as the music changes and a new conductor takes over. "Joe brought a lot of old-economy discipline," said Hagan, noting he has stayed involved in the strategic decision-making all along.
Hagan was involved in the acquisitions of two software companies, Tradium and Isadra, which prepared VerticalNet for its recent move into the software business and the sale of its NECX electronic parts exchange to Converge, a consortium that includes Compaq Computer, Gateway, Hewlett-Packard and Samsung. As part of the NECX deal, Converge licensed VerticalNets software to run the exchange for three years. Displacing Commerce One as software vendor for Converge was a big win for VerticalNet.
Still, VerticalNet gave up a business that provided more than half its revenue for the last nine months. And it still must prove it can execute its software strategy.