September 3, 2009
After being bought by larger companies, both Solid Cactus and Pepperjam continue to operate in Luzerne County and employ local people.
By Ron Bartizekrbartizek@timesleader.com
Business & Consumer / City Editor
KINGSTON TWP. – The news that Internet marketing services provider Pepperjam has been acquired by the larger GSI Commerce Inc. followed by only months the sale of Solid Cactus to Jacksonville, Fla.-based Web.com. While takeovers can raise fears of shrinking employment or worse, that hasn’t been the case since that deal was announced in April.
“Our concept of integration is making sure we take care of the people who have joined us,” said Web.com chief executive David L. Brown on Wednesday. That means making sure each of the company’s units has the resources it needs and finding ways to share knowledge and experience.
Already the company has “paired up” Solid Cactus with another recent acquisition and together they developed new software used throughout Web.com. The Solid Cactus staff also has been teamed with a search engine optimization group in Scottsdale, Ariz., resulting in more effective marketing tools.
“Our board is pleased with the progress we’ve already made. They met or exceeded our expectations,” Brown said.
Solid Cactus holds a niche as the largest builder of online stores based on the popular Yahoo! development platform, and Brown said Web.com management decided last year to stake out a bigger position in online retailing.
“That’s why we made that acquisition,” Brown said. “We got some … knowledge we needed.”
That focus should result in employment growth at Solid Cactus, Brown said, but he was careful not to promise too much.
“I think you will see growth,” he said. But “we move carefully and slowly. We’ve already added a number of people in the call center there.”
About 800 people work for Web.com. At the time of the acquisition Solid Cactus employed about 125.
“The Internet is becoming the marketing tool of choice,” Brown said, and retailers who cut other forms of advertising have tended to maintain their online presence through the recession. That gives him confidence Web.com can grow “even in the face of a sour economy.”
Web.com reported $26.5 million in revenue during its second fiscal quarter that ended June 30, down 14.5 percent from the same period in 2008. “We believe that our revenue will grow by the end of 2009,” Brown said during an Aug. 4 conference call with securities analysts.
More rapid growth will occur in 2010, Brown predicted on Wednesday, as new e-commerce products are rolled out.
Solid Cactus founders Scott Sanfilippo and Joe Palko continue with the company. “Both of them have very, very critical roles,” Brown said, as do other key managers and employees. “We’re counting on them to continue to perform. We need them to be with us.”
Kevin Carney, Web.com’s chief financial officer, said during the conference call that the terms for acquiring Solid Cactus included a $3.3 million cash payment and the assumption of $1 million in liabilities. Brown said there were other costs, including stock grants and options.
“It’s complicated,” Brown said, and complete details will not be released because the deal was too small to have a “material effect” on the company’s financial position.