Dialog Expands E-Commerce, Reports Mixed Q2 Results

Article excerpt

In late August, The Dialog Corporation announced the launch of Sparza Limited as a wholly owned subsidiary that will operate as the software sales arm of its eCommerce Division, one of Dialog's three divisions. Sparza will concentrate on the sale of e-commerce software to manufacturers, wholesalers, and resellers. The company also announced a licensing deal with Spicers, Ltd., reportedly Europe's largest office products wholesaler.

According to the company, Sparza offers four software modules, which can be integrated into a client's organization or used separately. The four modules are Sparza Buy (a procurement management system), Sparza Sell (online storefront), Sparza Resell (for wholesalers and aggregators to resell), and Sparza Host, which 'enables organizations to outsource to Sparza the development, hosting, and client service of a co-branded 'storefront' on the Web." Sparza supplies the underlying technology behind OfficeShopper, an Internet-based commercial office products service that launched in the U.K. in December 1998, and is due to launch in the U.S. by the end of 1999. According to the company, U.S. vendors have already been signed, providing over 30,000 products at launch.

Dan Wagner, CEO of Dialog, said: "This announcement marks a significant step forward in our strategy of expanding the software sales element of our business. The opportunity offered by the fast-growing business-to-business e-commerce software market is huge, so our mission with Sparza is to deliver more targeted solutions than we believe are currently available via other suppliers such as Ariba and Commerce One."

Q2, Interim Year Results

At the same time, Dialog reported its second quarter results and interim year results. The press release focused on "improved Q2 revenues, reflecting growth in new Web-based products and technologies." Specifically, the company highlighted Q2 revenues of $70.4 million, up 4.6 percent from Q1, and Q2 operating profits of $9.3 million, up 20 percent from Q1. Looking closer at the actual numbers, however, revealed a less positive picture. Analysts, stockholders, and the media zeroed in on the sharp fall in half-year profits over the previous year. The first half of 1999 pretax profits were $2.7 million, down from $11 million for the first half of 1998, showing a 76 percent drop. Predictably, Dialog's shares tumbled on the news. …