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VerticalNet beats 2Q expectations

At least the new CEO of VerticalNet (Nasdaq: VERT) gets to build on better-than-expected second quarter results.

A day after unveiling its next chief executive officer, VerticalNet on Wednesday reported a second quarter net loss of $18.8 million, or 23 cents per share, excluding special charges. First Call's survey of 24 analysts predicted a loss of 30 cents per share for the quarter ended June 30.

Shares of VerticalNet traded at 56 23/64 in afterhours activity on the Island electronic communications network immediately following the quarterly report. The stock closed Wednesday's regular trading at 56 3/4, down 5/8 for the session.

Including $55.2 million in amortization, $11.2 million in charges related to a stock conversion, $1.4 million in stock preferred dividend accruals, and other expenses, VerticalNet lost $87.1 million, or $1.05 per share.

"VerticalNet's operational model has led to outstanding revenue growth and our terrific performance this quarter further solidifies VerticalNet's position as a leader in the business-to-business sector of Internet e-commerce," said outgoing president and CEO Mark Walsh, who will be replaced by Joseph Galli, former president and chief operating officer of (Nasdaq: AMZN).

Second quarter revenue increased to $53.6 million, up 95 percent sequentially and 1,408 percent year-over-year. About 54 percent of VerticalNet's revenue came through the company's online exchange for electronic parts. revenue doubled from the first quarter.

Advertising genreated 38 percent of VerticalNet's revenue. Slightly more than a quarter of VerticalNet's ad revenue came from storefronts, and the rest came from sponsorships. The company's total storefronts grew 153 percent sequentially to 8,345 in the second quarter.

VerticalNet's Microsoft alliance generated $6.3 million in advertising revenue.

Revenue from slotting fees, product sales, commissions, education, training and auction-related revenue increased to $4 million from $1 million in the previous quarter.

Cash and other liquid assets increased to $181.6 million at the end of June, from $116.8 million in March. "We also believe that there will be numerous merger and acquisition opportunities in the next several quarters and we will look to enhance our liquidity position by pursuing financing opportunities as they become available to us," said Gene S. Godick, CFO and executive vice president.>