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ProcureNet enters online biz buying market

The company will combine and spin off four e-commerce divisions to take advantage of Wall Street's continued infatuation with Net stocks.

Joining the rush to cash in on the popularity of e-commerce, giant Fisher Scientific International is spinning off its procurement and cataloging divisions into a separate company called ProcureNet.

ProcureNet, which will become officially independent next week, combines four e-commerce divisions of Fisher that last year generated $59.5 million in revenues but lost $9.1 million, as they had for the two previous years. That gives the new firm some bulk in the procurement space, primarily comprised of startups such as Ariba, CommerceOne, RightWorks, and Clarus.

"They've been around a long time, then they just disappeared," said Geri Spieler, e-commerce analyst at Gartner Group. "They're now with the pack, but they really didn't market themselves well."

Fisher is not the first major company to seek to get value from Wall Street for its Internet operations. Bookstore Barnes & Noble is spinning off its online storefront Barnesandnoble.com in an initial public offering, and teen clothing firm Delia's is doing the same with its iTurf Web site.

Another company, computer retailer Creative Computers sold parts of its uBid auction site in a December 1998 IPO and intends to give the rest of its holdings in uBid to Creative shareholders as a dividend this summer.

David Baltaxe, an e-commerce analyst at Current Analysis praised the Fisher spinoff. "Procurement for businesses is a very hot space, very lucrative," he said. "It's one of the few that can show compelling ROI [return on investment] to enterprise customers."

ProcureNet will encompass Fisher Scientific's e-commerce software group Fisher Technology Group, its ProcureNet site for online procurement, and two catalog-oriented divisions, SourceSis of Houston and Structured Computer Systems in Connecticut.

Fisher Scientific spun ProcureNet off to its shareholders on March 30 by issuing one share of ProcureNet for each share owned in the parent company. Fisher, which had $2.2 billion in sales last year, valued the ProcureNet stock at 15 cents a share. The company said its goal was to enhance ProcureNet's access to the capital markets.

Fisher Technology, the e-commerce software division, markets Cornerstone software for corporate buyers and their suppliers. ProcureNet is an Internet mall for businesses buying or selling routine items, including office, electrical, and scientific supplies.