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Stamps.com Buys E-Stamp Name and Patents

By Lori Enos
Apr 30, 2001 10:20 AM PT

Internet postal provider Stamps.com (Nasdaq: STMP) announced Monday that it has acquired the domain name, URL and various patents from former competitor E-Stamp for US$7.5 mission.

Stamps.com Buys E-Stamp Name and Patents

"These acquisitions significantly enhance our position in the rapidly growing Internet postage and shipping areas," Stamps.com chief executive officer Bruce Coleman said.

"Combined with our existing intellectual property assets, the E-Stamp patents and trademarks provide us with a technology portfolio and brand recognition that places the company solidly at the forefront of Internet postage providers," Coleman added.

Stamps.com acquired 31 patents and trademarks related to Internet-based postage printing and management.

Portfolio Packing

The Santa Monica, California-based company said that the acquisition was part of a "broader strategy by Stamps.com to solidify its leadership in mailing and shipping services within the small business and home office markets."

The patents are in a "number of Internet postage areas we do not have patents in," Stamps.com spokesperson Kathleen Brush told the E-Commerce Times.

Brush said that the purchase of E-Stamp's intellectual property signals that Stamps.com is "getting back to the Internet postage area that we grew our roots in." According to Brush, the E-Stamp acquisition follows a number of diverse investments made by Stamps.com.

Stamps.com currently has 300,000 customers, but is targeting the market of an estimated 10 million small businesses and home offices in the U.S. with its Web-based mailing and shipping services.

E-Stamp Exits

As for E-Stamp, the sale of its intellectual property and name finalizes a long exit from the Internet postage business that began last November, when E-Stamp first announced that it was abandoning the online postage business to focus on providing shipping and logistics services to e-tailers.

Earlier in April, Mountain View, California-based E-Stamp announced that it was merging with Learn2.com and intended to focus on the corporate e-learning market, phasing out its shipping and logistics services completely.

In February, E-Stamp reported a net loss of $112.8 million, or $3.04 per share, for 2000. The company also let 45 employees go. The staff cuts came in addition to the 30 percent of its workforce laid off in November.

E-Stamp was the first company to receive U.S. Postal Service approval for Internet postage technology and the first company to offer Internet postage commercially.

Sticking Around

While E-Stamp decided to exit the struggling online postage market, Stamps.com is batting to stay in the arena by cutting costs further and looking for ways to increase revenue.

Stamps.com reported in April that sales during the first quarter of 2001 were $5.3 million, marking a 158 percent gain compared to the year-earlier quarter.

At the same time, Stamps.com's quarterly loss shrunk to about $9 million, largely due to two rounds of layoffs, which reduced the company's headcount from more than 500 to fewer than 200.

Spare Change

To increase revenue, Stamps.com has been considering raising its monthly minimum price of $1.99 for its "simple plan" customers. The company is also mulling the use of a paid-for customer support model and the possibility of selling postage via phone.

According to Stamps.com, savings in sales and marketing have already been achieved through a focus on acquisition of higher revenue "power plan" customers and through the renegotiation or termination of fixed payment partner relationships.

Starting in the second quarter of 2001, the company's partners will only be compensated on a pay-for-performance basis.


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