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Two Aging 'Net Newbies' Join: Hoover’s Buys
Posted On July 17, 2000
In the compressed world of Internet time, where calendar monthsseem to occur in quarter-hour segments, the aging process accelerates.Veterans of the online world may still consider Hoover's, Inc. (,founded as the Reference Press in 1990, a youngster when compared to ancientslike LEXIS-NEXIS or Gale Group's Information Access Company, but Hoover'sappears to be in the throes of a condition that usually affects only matureorganizations—the need to re-create its service and re-engineer its businessmodel. ( only been around since 1997, but the recent "correction" of dot-comson the stock market could turn anyone's hair white overnight.

And so Hoover's will acquirePowerize. Hoover's, which went public in mid-1999, will pay $2.42 millionin cash and 1.48 million newly issued shares of stock in exchange for allthe common stock of Hoover's will reserve approximately 400,000additional shares for issuance, as well as some $220,000, upon exerciseof all outstanding options and warrants. In total, the transactionis valued at approximately $17.1 million, based on the closing price ofHoover's common stock on the Nasdaq on July 11, 2000. The agreement issubject to approval by's stockholders, but holders of some58.9 percent of's shares have already agreed. The deal shouldclose during Hoover's second quarter, which ends September 30, 2000.

The new owner plans to's technology and connections to syndicate its content andservices to other Web sites, including corporate intranets, enterpriseinformation portals (EIPs), and business-to-business vertical and contentsites, including its own Hoover's Online Web site. In the past, besidesHoover's Online, the primary outlet for Hoover's products came througharrangements with large third-party services like America Online, Factiva'sDow Jones Interactive, Microsoft Network, Reuters, Yahoo!, et al. The Hoover'sOnline portal serves some 2.4 million businesspeople, of whom some 200,000pay just over $100 a year for full access to Hoover's core proprietarydatabase of company profiles and backgrounders, around which Hoover's integratesfeeds of outside data including news, a directory of business Web sites,and biographical and product information.

Hoover's CEO Patrick Spainsaid: "The acquisition of strengthens Hoover's in two veryimportant ways. First, our position as the leading destination businessportal is enhanced through the addition of's large user baseof businesspeople, premium content collection of more than 10,000 sources,industry-leading content integration technology and traffic-driving toolssuch as custom e-mail newsletters and alerts. Second, as a follow-on toour investment last week in search tools company 10K Wizard, Hoover's furtherenhances its position as a significant player in the emerging arena ofsyndicating tools and services for enterprise portals and other Web sites.Among these services are custom content and tools integration, applicationhosting and specialized e-commerce services."

Throughout the year, Hoover'shas concentrated on developing application service providers (ASPs), suchas and, and vertical industry portals (vortals).The company purchased a minority stake in B2B community creators Intellifactand VercomNet B.V., while continuing to expand European operation withthe launch of Hoover's Online Europe in London. As Spain alluded to above,it also recently purchased a 20 percent stake in financial search engine10K Wizard with an option to buy. (For more on the 10K Wizard investment,see this week's NewsBreaks Weekly NewsDigest.)

Powerize has over 600,000registered users, with a growth rate of some 2,000 new members daily, accordingto the company. It supplies access to some 10,000 traditional businesspublications, including newspapers, magazines, trade journals, news wires,and research providers. Much of its content comes through access to thecollections of traditional full-text database aggregators like Bell andHowell Information and Learning (BHIL), BNA, Comtex, EBSCO, etc. The business model distributes 2,400 of those 10,000 sources forfree, in return for gaining "sticky eyeballs" among its users. also re-distributesdata very aggressively. It has a network of high-traffic affiliate Websites, including, Fox Marketwire, and AOL's Netscape Netcenter;distribution partnerships with concerns like Inktomi, iSyndicate, MediaDNA,and Mobilize, Inc.; feeds to EIPs built by Engenia Software, HummingbirdLtd., Hyperwave, Lotus, Plumtree Software, Radnet, Sybase, Verity, andViador, among others; and direct feeds to the intranets of over 1,700 corporate,government, and not-for-profit institutions.

The acquisition should gosmoothly, with all of's 60 employees joining Hoover's's CEO Edwin Addison appointed as chair of Hoover's Powerizesubsidiary. President and chief operating officer of MarkGaertner will become president of the subsidiary. Terms of the acquisitionwill consolidate Powerize content into Hoover's Online beginning this fall.Upon the close of the transaction, will operate as Hoover'snew tools syndication and content integration subsidiary, still based's current offices in Linthicum, Maryland, and Reston, Virginia.

Edwin Addison said: "Fullyintegrating's premium business and financial information andnewsletters and the tools that power them will, we believe, cement Hoover'sOnline as the Web's most comprehensive business portal. We're pleased tojoin Hoover's to help businesspeople around the world do their jobs betterand faster than ever before."

Combining the distributionof's electronic newsletters to subscribers and page viewson its Web site, according to the announcement of the acquisition, shouldgive Hoover's Online approximately 50 percent more sellable advertisinginventory. Spain pointed out that "in addition to gaining market shareand broadening our revenue streams, this combination adds some criticalelements to the company.'s technology gives Hoover's Onlinegreater opportunities for targeted advertising through's industry-specificnewsletters and e-mail alert services, which further strengthen the productoffered by our advertising sales force. In addition, the purchase willapproximately double the size of Hoover's technology staff, which willallow us to be more aggressive in our efforts to roll out further enhancementsto Hoover's Online."

Looking at the deal, SusanFunke, information industry consultant, commented, "Slightly more of anadvantage for Hoover's than Powerize. Hoover's, who I consider traditionalmedia (based on its beginnings), was smart and recognized that they hadto acquire the new media technology to broaden their markets. In Hoover'scase, good quality content was not enough to sustain them. For Powerize,they gain some credibility and hopefully input on how to improve the packagingof content and search capabilities from a user's perspective that Hoovershas expertise in."

Hoover's management seesitself fighting a two-front war. In a interview with the press, Spain indicatedthat they target two groups of competitors. On one side, he said, are thehigh-end services like LEXIS-NEXIS and OneSource, which offer high-pricedinformation with significant added value in searching and sorting, forexample. On the other side, he sees the business portals with good, freeanswers like and But the free services do nothave the quality proprietary content of Hoover's, according to Spain, andwith these recent acquisitions, he believes Hoover's can compete with thehigh-end suppliers on value-added searching improvements.

If Spain is right, a lotof online business searchers should sleep easy tonight, dreaming of theglorious dawn and data that combines all three quality components—good,fast, and cheap. In the Second Millennium, one could only hope for twoout of three.

Barbara Quint was senior editor of Online Searcher, co-editor of The Information Advisor’s Guide to Internet Research, and a columnist for Information Today.

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