All is Quiet on the Philadelphia Spend Management Front
I'm hoping to speak with Verticalnet to get their perspective on my last post about them a couple of weeks ago, but we've not been able to set something up yet, despite exchanging emails. I did have, however, a brief chance to talk with a recently departed executive that echoed my sentiments that execution will be critical, but that the pieces should be in place. Everyone I've spoken with agrees that Vert's product, service, and solution elements are all there. Now, I know Verticalnet will make the argument that a transition to a subscription based model takes time (Ariba makes a very similar argument as well, in fact). But I would counter that with the strength of their services and spend visibility capability they should, in theory, generate significant up-front revenue in new relationships to ease the transition. In any event, it should be a good discussion when we finally do catch up, and I'll share it here at Spend Matters after it happens. Incidentally, Atlas Commerce co-founder Dan Tiernan has crossed functional boundaries with a new vendor, Skill Survey, in the reference checking / hiring arena. Seems simple and elegant enough.
- Jason Busch
- Jason Busch
Thank you for continuing to keep Verticalnet on the radar and attempt to gather some long overdue answers. As a Vert investor I can share my personal belief that they may have a great product and customers who rave about their solutions, but clearly lack a management team that is capable of driving this towards a profitable business. The last 2 years they have had a steady and significant downward slide in revenues. From day 1 both Lentz and Goddick have echoed a common them that the on demand model will generate revenues in future quarters, yet this has very much been a hollow promise. Q-1 of 2006 was the quarter they led investors to believe would be the turning point while achieving cash flow breakeven, needless to say there was a staggering loss. Over the past 2 years they have reduced operating expenses to a small degree, but the large concern from an investors perspective is their inability to ramp up the revenues. Verticalnet should be rapidly growing revenues with their operating model, customer success stories, global platform, etc. Clearly this management team has failed to do this and now are very close to becoming delisted as their 7-1 reverse split will need to hold their pps above $1 for yet another week, which based on recent trend and Fridays closing price of $1.02 is very doubtful. They may try to publish more of their pr hype, but I believe the market will only react favorably if they disclose actual revenues with their new signed contracts, as the 2+ year trackrecord of customer wins has done nothing for the pps.
With all that, one has to wonder how their board of directors has allowed this to happen, its also nice that they have yet to remove Mr. Fournier's info from their website.
Again, thanks for trying to shed some light into this fiasco, I amongst many others look forward to their future response.
Current Marke Cap $7.8 million
Market Cap 2 years ago $40+ million
Price at reverse spit (5 days ago) $1.48
Current pps $1.02
Declining revenues 6 out of last 7 quarters
Reason vert is public? To pay for the salaries of the underproducing mgt team, Vert has raised over $20 million the last 3 years to cover operating expenses by issuing new stock and dilluting shareholder equity. During this time their revenues have continued its decline, but the mgt team has continued to receive raises in salary and stock options.
Where is the accountabilty?