Fairmarket management consider buyout

Fairmarket management consider buyout

The local management of Fairmarket, the online auction company, is in negotiations to take over the operation after its US parent announced cut-backs around the world.

According to Belinda York, managing director of Fairmarket Australia, if the negotiations which are well advanced succeed, the local operation will form its own distinct company and will have the naming and reseller rights to the Fairmarket business in Australia.

The move saves the company and its employees from the closure, a fate that has befallen many US Internet companies which rushed to colonise the local market in the dot-com hey day.

Fairmarket Australia is currently in the process of advising its customers of the potential changed arrangements. These customers, including News Corp's GoFish, Yahoo's Sold and Macquarie bank's D-Auction, will continue to receive technical support out of the US as per existing arrangements. The expectation is that these arrangements would not change even if the local Fairmarket team gets its deal although the new local outfit would take on management of the client relationship.

Going forward York said Fairmarket Australia is currently in contract negotiations with three other companies and her expectation is that at least two of these, both B2B sites will be completed by the end of the quarter.

The US company which pioneered the networked auction site business model said the cuts, which include about 40 full time positions, were necessary to ensure it reached its stated aim of a cash flow positive balance sheet by Q1 2002.

Chief executive officer and president, Eileen Rudden is an immediate victim of the change, losing her job. In the interim, she will be replaced by CFO Janet Smith.

According to Smith: "With a cash balance at the end of the past quarter of approximately $71 million, a reduced cash burn rate, a talented workforce of over 100 employees and industry-leading technology, we are well positioned for future growth and profitability."

Ironically, the Australian operation has been profitable since April, according to York, who expects to add staff to her new company in the months ahead.

She said that while the initial Fairmarket model focused on the business to consumer space, her new company would pursue mostly business to business opportunities. She said the B2B category, as well as the promotions space offer the company its best option going forward.

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