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Amazon COO resigns
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July 25, 2000: 8:54 p.m. ET
Galli quits Amazon.com to head B2B e-commerce firm VerticalNet
By Staff Writer Michele Masterson
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NEW YORK (CNNfn) - Joseph Galli, the former Black & Decker executive hired last year by Amazon.com for his marketing and business skills, resigned Tuesday to become chief executive of business-to-business firm VerticalNet Inc.
Galli told CNNfn's Moneyline that his departure is due to "personal reasons." (294KB WAV)(294KB AIFF)
 However, analysts speculated that Galli had become frustrated trying to run the Seattle-based retailer in the shadow of founder and chief executive officer Jeff Bezos.
"I think that Galli is someone who's always been extremely ambitious and the word that I heard about him when he was coming from Black & Decker was that he was running a division and had a very good track record, but clearly that's at a different level than running Amazon, which is one of the highest-profile Internet companies, a relatively large-cap company," one analyst said.
"He was in a position where this should have suited his ambitions, but the feedback I've gotten was that it was Bezos' show and he was frustrated about that," the analyst said.
The announcement comes just a day before Amazon is due to report second quarter earnings. The consensus estimate is a loss of 35 cents a share, according to analysts polled by First Call.
A boon for VerticalNet
Susan Lacerra, managing director and senior e-commerce analyst at Jefferies & Co., said the news bodes well for VerticalNet.
"I think that bringing in someone with deep operating experience to the helm is probably going to be a big positive," Lacerra told CNNfn.com "Mark [Walsh] as chairman can continue to tell the story to the Street, and plus you bring in operating talent."
Lacerra currently rates VerticalNet shares as "accumulate," with a price target of $55. The company has moved up along with other players in the "net markets" or "e-marketplace" sector, whose other top names include FreeMarkets (FMKT: Research, Estimates) and PurchasePro (PPRO: Research, Estimates).
In a statement, Bezos offered support for Galli's decision.
"We'd like to thank Joe for his hard work and accomplishments over the last year," Bezos said. "I believe he is making the right decision for him and his family under the circumstances. We all wish him the very best."
Bezos will continue as chief executive and resume the duties of president.
VerticalNet Inc. (VERT: Research, Estimates), an e-commerce concern, runs 57 Web sites targeting various industries that maintain business-to-business communities, or vertical trade groups. VerticalNet shares rose 1-11/16, or 3 percent, to 58-7/16. The company is due to report quarterly results Wednesday.
 Amazon (AMZN: Research, Estimates), which fell as much as 12 percent earlier in the day on rumors that Galli was leaving, settled down and in late afternoon trading and closed off 1-1/8 or 2.9 percent, at 37-5/8. The stock fell to 37-1/8 in after-hours trade.
Galli will assume the titles of president and chief executive officer at VerticalNet. Mark Walsh will remain chairman.
"VerticalNet is an extraordinary company and I am extremely excited about the opportunities ahead," Galli said in a statement. "Our goal is to dramatically expand VerticalNet's impact on e-commerce and build the company into a driving B2B force."
Following the announcement, Banc of America Securities analyst Tom Courtney downgraded Amazon's rating to "buy" from "strong buy."
"Why are we downgrading the stock now? Mainly because of our belief that sales may not be advancing at the rate that we had previously anticipated and also because of the impending departure of Galli," Courtney said in a research note.
"Galli was a very visible hire and was one of the key architects of the company's strategy as part of the new-guard management team. We have pulled our previous target of $80 and will recast our assumptions and republish following the second quarter release," Courtney said.
Galli, 42, joined the Seattle-based e-commerce leader last year after 19 years at Black & Decker. He had been president of B&D's worldwide power tools and accessories division, which generated $3.1 billion in sales, or 70 percent of the company's business. He reportedly was set to take the helm at Pepsi's Frito-Lay division but instead went to Seattle, where his first order of business was to launch Amazon's tools division. 
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