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Open Market buys Web cataloger

The booming biz-to-biz catalog market is beginning to shake out. Seeking to boost its position, Open Market acquires Waypoint Software.

Seeking to boost its position in business-to-business catalogs, Internet commerce specialist Open Market (OMKT) is acquiring Waypoint Software for about $12 million in cash and equity.

Open Market expects the acquisition of Waypoint, founded just 13 months ago, to be completed this quarter. Open Market's stock traded around 15 at midday, off 1/8 from Tuesday's close.

Waypoint's software is designed to create Internet-based business-to-business catalogs quickly by retrieving complex product information from databases. It is used primarily by manufacturers in the computer, electronics, mechanical, and instrumentation industries.

"It's a long-term investment for Open Market," said Greg Vogel, associate stock analyst at Montgomery Securities. "it will be interesting to see what sort of integration and product they get out of it. It's a long-term positive."

Open Market is focused increasingly on the business-to-business market, and Gail Goodman, vice president of product and industry marketing, said Waypoint's "synergistic" software will serve as a catalog front-end for companies that use Open Market's back-end e-commerce software.

"Companies are transforming the way they do business with partners and customers," said Gary Eichhorn, president and CEO of Open Market, which markets high-end e-commerce software. "This acquisition ideally positions Open Market to deliver critical solutions in the business-to-business sector."

Goodman said Open Market would continue to work with other partners whose software creates front ends for Internet commerce, including Trilogy, Cadis, and Saqqara, as well as with OneWave, for integration with existing software at customer sites.

The Yankee Group consulting firm projects that Web-based business-to-business orders will grow from approximately $1 billion last year to nearly $134 billion by the year 2000. It estimates that 40,000 U.S. manufacturers already have catalogs that could be moved to the Internet.

Open Market also picks up a major new customer, Cahners Publishing, a unit of international publisher Reed Elsevier. Cahners has created a Manufacturing Marketplace Web site with Waypoint's software for 50,000 manufacturers that advertise in its trade magazines.

In December, Waypoint announced initial venture capital investments from Zero Stage Capital and BancBoston Ventures.

New features in Open Market's own OM-Transact software include support for electronic data interchange (EDI), which involves automated transactions between computers without human interactions. EDI is popular in the manufacturing segment.

Open Market is due to report its fourth quarter earnings tomorrow, and Open Market officials indicated it would have more details on the Waypoint acquisition at that time. According to First Call, the consensus of Wall Street analysts is that the company will lose 23 cents a share. Quarterly revenues are estimated about $8 million.