BUSINESSWEEK ONLINE : OCTOBER 23, 2000 ISSUE
BUSINESS WEEK E.BIZ -- UPSTARTS ONLINE EXTRA: One More Letter of Resignation at Stamps.com With the loss of its CEO, following three other key departures, the online-postage company faces a crisis of faith On Oct. 12, investors found yet another reason to treat their shares of Internet postage companies as if they were pieces of junk mail. Stamps.com announced that Chairman and CEO John Payne had resigned following a board meeting the previous evening. Marvin Runyon, a former U.S. postmaster general and Stamps.com board member, has stepped in as acting chairman. The timing couldn't have been worse. Just two days earlier, Chief Operating Officer Loren Smith, Chief Financial Officer John LaValle, and Comptroller Cadelario Andalon had all resigned. SEEKING MANAGER. The company brushed off those departures as nothing more than normal turnover. And Runyon emphasized that Payne will still remain active with the company, serving on its board and chairing the board of its spin-off, EncrypTix. "John Payne is very good at getting things started," Runyon says, "but we're reaching a real operating stage, and we need someone who can manage that." Investors seem to have doubts that anyone is going to be able to engineer a turnaround. Stamps.com's stock, which had fallen 13% upon news of the earlier resignations, dropped another 13%, to $2.56, in morning trading on the day of Payne's departure. The stock had already taken a hit last month, when competitor Pitney Bowes handed Stamps.com a patent-infringement lawsuit, the second such suit filed against the company by Pitney. Stamps.com shares traded as high as $98.50 last summer. Competitor E-Stamp has also suffered the effects of the Stamps.com departures, with its shares falling 14%, to a measly $0.75 a share the week of the announcements. Now trading under $1, E-Stamp is at risk of being delisted. BIG LOSSES. It's no surprise investors are beating up on the e-postage sector. Customers haven't embraced online postage, causing both Stamps.com and E-Stamp to post disappointing sales and tremendous losses. The companies have been trying to bail themselves out by introducing new products and upgrading their online-postage offerings. Stamps.com is the market-share leader, and with $333.6 million in cash on its balance sheet, it's the more financially stable of the two companies. Still, these high-level departures seem to be sending a clear signal that the very people trying to make online-postage work are starting to lose hope. That's a signal the fledgling industry could do without. By Arlene Weintraub in Los Angeles _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS EBIZ Contents for issue dated Oct. 23, 2000 Dead Letter? CHART: Insufficient Postage TABLE: Addressing the Issues ONLINE EXTRA: One More Letter of Resignation at Stamps.com ONLINE EXTRA: Q&A with E-Stamp Co-Founder Suni Kapoor INTERACT E-Mail to Business Week Online

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