Holocom Networks Replaces Five of Seven Board Members
Online Asset Exchange is taking a hard look at its current business model and says it’s shooting to reach profitability in 16 months.
“This (doing business over the Internet) is clearly taking longer than we initially anticipated,” said Frank Berlage, OAE’s chairman and president.
Berlage said he and Norm Bastin, the founders of the B2B online exchange for used industrial equipment, have taken a leave of absence while the company conducts a management review.
“We’ve both retained our titles and have no plans of leaving,” said Berlage from his home in a phone interview. “We don’t want to bias an independent review that should be completed in a few weeks.
“We’ll look at our business model and see if our hopes to become profitable in 16 months are reasonable and justified, and if so, we’ll move forward with the current business model. If not, we’ll look at another business model.”
On the plus side, OAE got off to a great start in 1999, capturing some heavy hitters in VC funding. Last year, it attracted $25 million in second-round funding, bringing its total financing to $40.4 million. That cushion has enabled it to outlast several other competitors, including San Diego-based equipp.com, which went bankrupt last year; and two other B2B exchanges, thedock.com and esprocket.com, which have been shut down.
But building revenues has been a real challenge, Berlage said.
He declined to reveal actual revenues but said these have risen by an average of 31 percent monthly up to May. It’s not the growth rate the founders and investors had expected. “Our biggest problem is patience,” he said. “The venture capital firms and investment banks are very concerned about what’s happening in the marketplace and that’s causing them to lose patience.”
In April, one unnamed investment bank sent letters to board members requesting that OAE return its investment, but that did not happen. Berlage said because of the request, the board decided to conduct a thorough review of the company.
The company laid off 26 workers in its telemarketing operations in January. There are no plans to reduce its current staff of about 54 full-time employees, Berlage said.
For the moment, OAE is in much better shape than many dot-coms. It has $25.5 million in cash and claims to have more than 10 times the amount of assets on its site than its nearest competitor.
But OAE’s future is really linked to the growth and acceptance of the Internet as a cheap and safe place to sell and buy things, and that could take a while.
“If the marketplace is not ready for the services you are providing, regardless of how valuable you think it is, then you have to be conservative in how you spend cash and make sure you’re still viable until the market comes around.”
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Holocom Networks Revamps Board:
It’s not often a company does a wholesale replacement of its board of directors, but that’s what happened at Holocom Networks, a San Diego-based provider of telecom infrastructure products.
The 4-year-old company replaced five of its seven directors, filling most of the seats with top-level executives in the real estate industry.
The firm’s strategy is to use the seasoned real estate pros to reach out to their colleagues in that industry, who are the decision-makers regarding the purchase of Holocom’s products.
Holocom said it installed a network of cables providing broadband data services in a recently completed office building in downtown Los Angeles.
The company also signed an agreement last month with Kimball International, a maker of office furniture, to incorporate Holocom’s network systems into Kimball’s office furniture.
AMCC Expects Poor Showing:
More bad news in the world of Internet equipment manufacturing caused Applied Micro Circuits Corp. to restate its upcoming quarterly estimates. Instead of sales between $70 million to $85 million, AMCC said it will log sales between $40 million to $45 million and a net loss of between 4 to 6 cents per share. The company plans to disclose the actual figures July 18.
Dave Rickey, AMCC chairman and CEO, said the company continues to reel as many others are in the networking manufacturing industry, dealing with an overall downturn in spending. Many customers have large inventories and are either not ordering more products or canceling existing orders.
“There’s such an inventory overhang it clouds or masks any optimism,” Rickey said.
Shares of AMCC, which had traded on Nasdaq last year well above $120, closed up 34 cents to $14.20. Over the past year, it has traded between $11.25 and $109.75.
Two of AMCC’s major customers are Nortel Networks and Cisco Systems, both of which have seen huge declines in sales and have been laying off workers. Last month, Canada-based Nortel predicted a $19 billion net loss and said it would cut 10,000 employees.
Rickey seemed reluctant to give any sense of a turnaround.
“The magnitude of this downturn is greater than we, or our customers anticipated, and the progress in reducing excess inventory in the channel appears to be slower than they originally thought.”
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Kintera Feels Ducky:
Kintera, Inc., a San Diego-based software maker geared to helping nonprofits do online fund-raising, was part of the Million Dollar Duck Race held in New York City on June 28.
The firm’s Web-based fund-raising technology enabled donors to the Special Olympics event to “adopt” a rubber duck for $5 each for the big race along the East River.
Thousands of rubber ducks, a few which contained a $1 million prize marking, were dropped from the Brooklyn Bridge and floated to the finish line at the South Street Seaport in Lower Manhattan. The winning duck got a two-year lease on a new car, but if the winner was one of the specially marked ducks, the donor won $1 million.
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