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Prodigy adds Solutions division

The ISP, which used to be comprised of Prodigy Internet and Prodigy International, is now made up of three separate divisions, including a new line of business, Prodigy Solutions.

Prodigy said today it is restructuring the company into three divisions and announced that chief executive Paul DeLacey is stepping down to serve as strategic adviser to the chairman.

DeLacey, who has served as president and CEO since International Wireless acquired the company in June 1996, has decided to change his role in order to spend more time with his family, the company said. DeLacey will, however, remain on Prodigy's board in addition to assuming the role of adviser to chairman Greg Carr.

The privately held company, which used to be comprised of Prodigy Internet and Prodigy International, is now made up of three separate divisions. Two of the divisions include the Internet and international business, but the third is a new line of business named the Prodigy Solutions division.

The Solutions division will create and sell Internet-based technologies, and also will handle software-development and Web-hosting.

Prodigy decided to form the Solutions division as it realized it had developed software that other companies wanted to buy, according to Prodigy spokesperson Mike Darcy.

Each division will have its own general manager, as well as a marketing staff and other support operations.

Darcy said the cost of operating the three divisions will not increase current operating costs, given that the Internet and international operations divisions were virtually already in place. The costs associated with the Solutions division will grow over time, as it adds more staff to sell Prodigy's existing software, he said.

The Prodigy Solutions division will be headed by Inder Gopal, who previously served as the company's chief technology officer and a senior vice president. Prodigy International, which will comprise Prodigy's international activities, such as its ventures in China and Africa, will be overseen by the company's former international senior vice president, Paul Tucker.

And Russ Pillar, who most recently was managing partner at private investment firm Critical Mass and a Prodigy board member, will head up Prodigy Internet.

Prodigy's move comes as the online service struggles to emerge from the lengthening shadow of America Online, whose recent acquisition of CompuServe boosted its worldwide subscriber rolls to 11 million.

One analyst expressed skepticism that Prodigy's shake-up and restructuring would have much of an effect on its fortunes.

"This doesn't make sense to me as a way to rebuild the brand," said Keith Benjamin, analyst with Robertson Stephens. "At this point I don't know how they can turn things around. The amount of money they would have to spend to battle AOL would make it an unfeasible business model."