December 1, 1998 11:25 AM PST

Intel pays cash for iCat

Pushing further into e-commerce, Intel today acquired catalog software vendor iCat for an undisclosed sum in cash.

iCat will join Intel's new business unit, but in the future iCat storefront software may be used by Pandesic, the e-commerce service that is a joint venture of Intel and German software giant SAP.

As a condition of the purchase, iCat last week laid off about 28 employees, but both companies said additional layoffs from iCat's payroll of 100 are not planned. iCat will continue to operate from Seattle, where Intel has few employees. The deal is expected to close by year's end.

Among the departees: Founder/CEO Craig Danuloff, who becomes chairman until the deal closes, then departs. Chief operating officer Jamie Miller becomes acting CEO.

"We are very much interested in e-commerce. It is consistent with our efforts to explore new business opportunities over the past few years," Intel spokesman Tom Waldrop said, mentioning earlier Intel ventures into PC support and teleconferencing.

The chipmaker also has its own initiatives in security, digital imaging, and videoconferencing, Waldrop pointed out. "This and other new business areas can both provide new business opportunities and make PCs, particularly networked PCs more useful and attractive," he added.

In June, Intel bought a 1 percent stake in e-commerce software vendor Open Market, which agreed to port its software to Intel processors.

For iCat, the sale caps a search of several months for cash from strategic investors, said executive vice president Doug Schulze.

"We were looking for a partner of the ilk of Intel," Schulze said. "Intel lets us basically fulfill our grand mission of today, to commerce-enable all businesses."

Although Intel and iCat say it's a coincidence, their deal follows by a week the sale of Netscape to America Online. As part of that agreement, Sun Microsystems' sales force and resellers will market Netscape's e-commerce software.

iCat, founded in 1993 to sell software that creates catalogs on CD-ROMs, had to re-orient its business with the rise of the low-bandwidth Internet. It primarily sells to small and mid-sized companies that want to set up Web storefronts, selling through ISPs and Web developers. iCat's online mall, primarily a listing of links to stores built with its software, has some 6,000 entries, including Bloomingdales, Nabisco, and Boeing.

The company suffered a blow in the spring when Open Market, a major partner, bought another catalog tools vendor, ICentral, and began selling its software instead of referring customers to iCat.

No immediate changes in iCat's strategy are anticipated, Schulze said. Intel would not disclose whether it plans future investments in iCat to expand its activities.

Intel is an investor in CNET: The Computer Network.

 

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