Vert: To Shoot or Stud the Old Horse?
JP Massin has the continued scoop on VerticalNet's financial performance over on his blog. He writes: "VerticalNet financial figures are improving but still didn’t turn black. Nor is [it] improving its revenue stream: only 16M$ in 2006 compared to 20M$ in 2005. It's a pity for such a quality technology provider ... will suffer from Global-2000 minimal-risk management approach (not contracting with non-profitable vendors) ... Consolidation looks like a serious alternative for the future, but with whom and when… it depends on how long VerticalNet can run its business, as is, with 2M$ cash still available and a net-operating loss of 720K$ in Q4-06."
Over the years, Verticalnet has proven a number of things to me. The first is that it's possible to build and maintain great technology and have the market basically turn its head. Indeed, Verticalnet has been ahead of the game in so many sourcing and operational functional checklists over the years (just ask expert Pierre Mitchell who was at AMR in 2001-2002 when he gave them a top ranking relative to FreeMarkets and others). Second, Verticalnet has proven to me that investors will keep throwing good money after bad provided the messenger is eloquent and can spin a good story. So what ever happened to third-party due diligence? And third, it sucks to be public when you're small.
But the question remains: to shoot or "to stud" -- I hope that's a verb -- the old horse. Personally I think Vert's offspring will be quite valuable in another vendor's hands -- someone who knows how sell and market what they have, or push it on a captive installed base. But their time, as JP points out, is running out. My current advice to Verticalnet customers is to develop alternative options from a risk management perspective.
- Jason Busch
Over the years, Verticalnet has proven a number of things to me. The first is that it's possible to build and maintain great technology and have the market basically turn its head. Indeed, Verticalnet has been ahead of the game in so many sourcing and operational functional checklists over the years (just ask expert Pierre Mitchell who was at AMR in 2001-2002 when he gave them a top ranking relative to FreeMarkets and others). Second, Verticalnet has proven to me that investors will keep throwing good money after bad provided the messenger is eloquent and can spin a good story. So what ever happened to third-party due diligence? And third, it sucks to be public when you're small.
But the question remains: to shoot or "to stud" -- I hope that's a verb -- the old horse. Personally I think Vert's offspring will be quite valuable in another vendor's hands -- someone who knows how sell and market what they have, or push it on a captive installed base. But their time, as JP points out, is running out. My current advice to Verticalnet customers is to develop alternative options from a risk management perspective.
- Jason Busch
#1- They face being delisted again due to the pps issue, dont have 5 million in shareholder equity and this would not allow them to continue to repay their present debt obligations which are now financed almost entirely through shareholder dillution.
#2- Their biz model shows no signs of revenue growth. Minus their legacy biz they generated 14 million in 06' with expenses north of 20 million, and their is no dramatic revenue increases projected.
#3- Their mgt team has lost all credibilty
Bring out the ammo....