Malvern, PA November 13, 2002 Troubled supply chain software provider Verticalnet today announced the resignation of its chief executive and financial officers as the company began to explore options for selling itself off.
Kevin McKay, president and CEO, and John Milana, CFO, stepped down after having "taken Verticalnet through a successful phase of financial restructuring that has enabled the initiation of the process to sell the company," the software provider said in a statement.
"With the Verticalnet board, and myself personally, taking a leadership role in driving the sales process, and with our third quarter Form 10-Q filing behind us, Kevin and John felt the timing was right to pass the baton," said Verticalnet Chairman Mike Hagan. "With their help, Verticalnet has restructured significant financial obligations to a point where we believe we can viably focus on positioning the company for sale."
Nathanael Lentz, formerly senior vice president of strategy and marketing for Verticalnet, has stepped into McKay's shoes. Lentz had headed Verticalnet's internal process to position the company for sale, according to the company. Lentz will replace McKay as a member of Verticalnet's board of directors.
McKay took over at Verticalnet in February, where he had been a board member. He was formerly CEO of SAP America, where he had previously served as chief operating officer and CFO. Milana, another SAP America veteran, came to Verticalnet in February, too.
The resignations come one week after the company filed its Form 10-Q for the quarter ended September 30, in which Verticalnet disclosed its board's decision to engage US Bancorp Piper Jaffray to assist in the possible sale of the company. McKay and Milana both signed the Form 10-Q and the required certifications.
In that 10-Q, the company acknowledged that it is continuing to operate in the red, with a loss from continuing operations in the third quarter alone of nearly $33 million. The company projected it could run out of money by the end of the first quarter of 2003. Those grim figures apparently prompted Verticalnet's directors to explore options for selling the company.
In the company's statement on the resignations, McKay said, "I believe that many software companies would benefit greatly from infusing the company's leading edge software products and services into their core offering."
Verticalnet did not name a replacement for Milana at this time but said it has begun a process to identify a new CFO.
Since the tech bubble burst two years ago, Verticalnet has struggled to transition from a dot-com era manager of vertical marketplaces to a post-bubble provider of enterprise software, acquired with its purchase of Atlas Commerce, that lets companies set up private trading exchanges.
In July, the company sold off its small and medium business (SMB) unit, bought back $106 million in preferred stock at a steep discount and effected a reverse stock split to avoid delisting on the NASDAQ. At the time, McKay said the moves would help the company secure its long-term fiscal health while its management team added flexibility to pursue a variety of strategic initiatives.
Those steps drew positive comment from technology consultancy AMR Research, which suggested that the moves could help Verticalnet survive given what AMR felt was a strong product offering, including its top-rated e-sourcing offering. Nevertheless, AMR suggested that Verticalnet's biggest challenge would be staying viable long enough to let its product line gain some traction. Clearly Verticalnet's directors feel that the company is quickly running out of time.