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BT cash cutbacks hit US e-marketplace

BT and Internet Capital Group have slashed their shareholding in VerticalNet, forcing the US business-to-business (B2B) marketplace specialist to dramatically cut back its European operations.
Written by silicon.com staff, Contributor

BT and Internet Capital Group have slashed their shareholding in VerticalNet, forcing the US business-to-business (B2B) marketplace specialist to dramatically cut back its European operations.

In July 2000 BT owned 33 per cent of the company, but this has been cut to just 10 per cent - jointly-owned with Internet Capital Group (ICG). VerticalNet confirmed that the company's online B2B European marketplaces and communities will now be hosted and administrated from the US rather than from Europe, where they were hosted at BT's data-centre. The company has also axed the European editorial team, now taking content for the online communities direct from the US. David Kostman, president of VerticalNet International, insisted that the restructuring had not amounted to a 'slimming down' of VerticalNet Europe. "Under the original structure Europe was a standalone separate company. So many functions had been duplicated [here and in the US]," he explained. Nasdaq-listed VerticalNet runs 57 industry-specific online communities. The company would not release numbers of European-specific customers or revenues. However Kostman admits that projections for take-up of B2B markets generally have been too optimistic: "The growth is not as much as anticipated. The expectations were way too high and way too fast." Three filings to the Securities and Exchange Commission (SEC) this year track the divestiture of shares in VerticalNet Europe by ICG and BT. The last filing, lodged in March, reduced the two companies' combined stake to 10 per cent. As a result of the changes, the company stated: "Clearly some local people did have to be made redundant," but would not be specific on numbers. The company will retain European personnel to look after local sales and marketing. However, these divisions have not been immune from change. European sales director David Parry-Jones, who only joined the company from Lotus in December 2000, has recently left the company. The new sales strategy for VerticalNet is to recruit partners to help sell its technology and services, rather than to sell directly to customers. BT Ignite signed up as a reseller of VerticalNet Solutions' eMarketplace suite in January, but has yet to make a decision on how the technology will be sold. VerticalNet Europe had intended to open offices in France, Germany, Italy, Spain, Scandinavia and Benelux, as well as European headquarters in the UK.
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