THE DAY AHEAD: About.com gets B2B religion

About.com set to launch B2B unit.
Written by Larry Dignan, Contributor on

About.com will soon be making business-to-business its business. The company, best known for its portal of human guides, is hoping to use its platform to aggregate industry content and rival VerticalNet. The company recently posted better than expected fourth quarter earnings as revenue swelled to $13 million. The results had Wall Street analysts raising the company's price targets and calling it an undervalued relative to its peers. Derek Brown, an analyst with WR Hambrecht & Co, said in a research report that About.com could hit $150 (£93) a share in 12 months.

While About.com's traffic and revenue growth has been receiving all the attention, a B2B story is also brewing. Through its recent acquisitions of ExpertCentral.com and North Sky, which operates Freeservers.com, About.com is buying the tools it needs to be a B2B player.

The company has set up a B2B unit as an independent legal entity, which will have a separate CEO and its own stock option plan. About.com is currently seeking an outside CEO who could take the company's industry division public. In an interview with ZDII, CEO Scott Kurnit said no specific plans were in place for a spin-off, but "at some point, it's logical that it would have its own path to liquidity." The B2B unit could also emerge as a tracking stock.

About.com's B2B strategy should emerge over the next few months -- the company is planning a serious launch in the third quarter of this year. In the meanwhile, it will integrate ExpertCentral.com, use Freeservers.com for company bridge pages and storefronts, and unveil "paid links", which give partners top billing, based on what they bid for placement.

Currently, About.com lumps industry sites into its business category. And although the company's industry content is strong, Kurnit has grander plans and has put a team in place to develop a B2B site.

He added that the company plans to expand its current 24 industry-specific sites and use the same leverage and platform which made its core portal a hit. At launch, About.com will have 39 industries covered. It will announce an auction partner shortly, and said its B2B unit could take a slice of transaction fees and intellectual property sales via ExpertCentral.com.

"Investors don't think of us as a platform company yet, they think of us as an efficient content company," said Kurnit. However, this perception could change. He said the company's push into the B2B space should pass the traffic around to other parts of the network: "People may be looking to sell composite materials, but they still do something on the weekend."

For all its $7.5 billion in market cap, VerticalNet remains primarily a trade publisher, even though it is adding e-commerce to the mix via industrial auctions and services. VerticalNet will look vastly different once a partnership with Microsoft kicks in, but in its present state it is more content than commerce.

About.com reckons it can emulate VerticalNet's model and boost its $1.2 billion market cap. Kurnit acknowledged that there may be some doubters about the B2B strategy, but added there were also doubters when About.com was known as the Miningco.com.

"Investors have no idea that About.com is a platform we can leverage," said Kurnit. "We have to go out and tell the story."

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