Kevin McKay, former CEO of the American subsidiary of German software giant SAP, has been appointed as the new CEO and president, the company announced Tuesday. He is charged with steering Verticalnet out of its steady decline post-dot-com downturn.
McKay is taking on a tough assignment. Malvern, Pa.-based Verticalnet turned its first profit excluding noncash expenses and nonrecurring items in the fourth quarter, but revenue fell by nearly half to $24.1 million, from $40.7 million in the same quarter in 2000. Shares currently trade for less than a dollar.
Against a backdrop of executive turnover and business-plan changes at the company, analysts say Verticalnet has the additional challenge of entering a market populated by numerous and formidable rivals, which include Oracle, i2 Technologies and SAP.
"It's going to be difficult to make a credible stand against a suite vendor who has a bigger, higher-performance product line," said Joshua Greenbaum, an analyst at Enterprise Applications Consulting. "If McKay can't do it, it can't be done."
McKay, who joined the Verticalnet board of directors in July, is the fourth person to take the CEO seat at Verticalnet in six years. Joseph Galli, one-time president and chief operating officer of Amazon.com, held the post for just six months beforeamid the brutal shakeout among business-to-business e-commerce start-ups.
Tuesday's appointment follows the company's recent acquisition of software start-up Atlas Commerce and an announcement last week that Verticalnet intends to sell the division that operates more than 50 portals in order to focus on its software business.
McKay replaces Mike Hagan, who co-founded Verticalnet in 1995 as a business-to-business Internet portal. Hagan takes over as chairman of the company, replacing former CEO Mark Walsh.
"The last piece of the puzzle was to get someone with enterprise software in their DNA," Hagan said. "This year we have a singular focus and purpose, and I think Kevin will take it to the next stage."