Breakaway Solutions: B2B for the Rest of Us

The new acronym is FSP, which stands for “full service provider.” As the
name implies, an FSP is a one-stop consulting firm — providing services that
range from e-business development to application hosting. In fact, services
may even include the outsourcing of a company’s chief technology officer or
chief information officer.

Breakaway Solutions (BWAY)
was the first to launch an FSP strategy early in 1999. What’s more, the
focus is on the burgeoning middle market for business-to-business
applications.

Breakaway went public last October raising approximately $42 million. The
company’s share price tripled on its first day of trading. Since then the
stock has been strong. And expect the strength to continue.

The company’s financials have been tremendous. In its latest quarter, total
revenues were $10.6 million, an increase of 324 percent from the $2.5 million
reported in the prior year’s fourth quarter.

Their customer base is growing rapidly. They landed 27 new customers in the
fourth quarter, including Dutch Uncle, Circles, Broadwing, MediaBridge,
eNumero, and iParts.

Loyal customer satisfaction and retention parallels this awesome customer
growth rate. A promising 90 percent of its fourth quarter customers who
have engaged Breakaway Solutions to build their e-business applications are
also hosting or planning to host their sites through Breakaway Solutions.

Interestingly enough, it was the savvy B2B incubator, Internet Capital
Group, that invested in Breakaway. This relationship has provided access to
many customers. For example, Breakaway has developed a variety of sites for
VerticalNet.

Key to the success of Breakaway has been speed. For example, it took a mere
eight weeks for Breakaway to launch the RealtyIQ.com site. This was
essential for the company to get additional venture capital funding.

Breakaway is also highly creative. The company recently announced Breakaway
Capital LCC, which will make investments primarily in customers’ businesses.

According to Forrester Research, the midsize business market will account
for 53 percent of e-business spending in 2000, which is up from 15 percent
in 1998. It’s definitely very good news for Breakaway, which is dominant in
this rapidly growing market segment.

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Backed by Internet Capital Group with Q4 revenue growth of 324 percent, Breakaway Solutions looks attractive. Will the stock soon “break away” to higher levels? Discuss it here

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