Hoping to jumpstart sales, LivePerson, a New York-based
provider of hosted Web chat services, acquired the assets of Silicon
Valley's NewChannel, a rival ASP serving up related customer-acquisition
technology, in a cash transaction. LivePerson claims the purchase will
increase monthly revenue by 12 percent, with minimal incremental costs.
That's because the key asset, in this case, is NewChannel's customer
list, which includes Global 2000 companies in financial services,
telecommunications and high-tech. The strategy is to cross-sell Web chat
services to existing NewChannel customers; LivePerson's service enables
online businesses' marketing, sales and customer service groups to
communicate with Internet users and customers through instant messaging
(IM).
"[NewChannel customers] will be able to complement their existing online
initiatives in real-time, proactive sales, marketing and support
capabilities," said Robert LoCascio, CEO of LivePerson, in a statement. "We
will also continue to provide these clients the proactive monitoring and
sales capabilities that enabled NewChannel to successfully build such a
strong customer base." (For more on IM and CRM convergence this week, see
Jabber, Virtual Personalities Link Up.)
According to publicly-traded LivePerson, the net cash impact of the
transaction is expected to be less than $1 million. And management expects
the transaction to be net cash flow positive within approximately twelve
months. LivePerson customers include American Airlines Credit Union,
Ameritrade, Earthlink and, more recently, eBay -- all tallied, more than
3,000 customers.
The acquisition is an aggressive, yet potentially risky move by
LivePerson to create opportunities among a market littered with company
failures, says Kelly Spang-Ferguson, senior analyst at market researcher
Current Analysis. On the upside, LivePerson will retain
NewChannel account
managers, making the transition smooth. "Companies that can continue to
invest in product development and customer acquisition and retention will
come out on the other side of this economic downturn in a stronger
competitive positioning," says Spang-Ferguson.
But the acquisition might also be perceived as a last gasp, of sorts.
LivePerson's sales were down 25 percent in Q1 this year from the same
quarter last year. And the company, like many others in this space, is
bleeding red ink. "LivePerson's own viability will be put to the test,"
Spang-Ferguson says.
Tom Kaneshige also writes for
destinationcrm.com,
the Web site for CRM Magazine
