Certainly, that was the thinking when PSINet, Inc plonked an estimated $1.9 billion on the table back in March in its bid to acquire Metamor Worldwide. See related ASPnews.com story, PSINet Aims to Join ASP Giants, Mar 22nd, 2000.

In practice, the outcome has been quite different. This week (Nov 2nd) PSiNet's president and chief operating officer resigned as the company announced a massive net loss of $1.4 billion for its third quarter. Most of the loss came from write-downs attributed to the aftermath of the Metamor deal, which closed in June.

Back in June, Metamor became PSINet Consulting Solutions and unveiled its FSP strategy - see related ASPnews.com article, How Much Service Makes an FSP?, Jun 16th, 2000.

But now PSiNet has taken a $504.0 million write-down against those consulting business assets as it prepares to sell them off, along with a further $663.8m write-down relating to its 80% stake in e-business service provider Xpedior, which it acquired along with Metamor.

What is astonishing is the rapidity of the decision to pull out of markets PSiNet had barely entered. Moving into the ASP market is not simply a matter of adding together two functions of an equation. If the company's management believed that was all they needed to do to yield instant results, then their lack of vision is truly staggering.

PSiNet plans to return to its knitting as a provider of managed web hosting services and high-speed Internet access. But having slammed the brakes on its data centre build-out to conserve its fast-dwindling cash reserves, some observers are already questioning its ability to avoid bankruptcy.

The stock market's verdict has been swift. PSiNet shares halved on Thursday, the day of the announcement, and closed Friday at an all-time low of $2.34. That's 96% down from the high of $60.94 achieved on Mar 9th, two weeks before it announced the Metamor deal. The first of the inevitable class actions suits was filed Friday, but the idea that the company knowingly misled investors is risible. Clearly it didn't have a clue what it was doing.

Online development

One of Silicon Valley's most intriguing startups removed some of the wraps from its closely-guarded operations on Weds (Nov 1st).

Catapulse Inc launched its hosted software development service with the news that IBM Global Services has become its first announced customer.

The Catapulse service provides an Internet-based infrastructure that allows systems integrators and software development teams to collaborate on software projects wherever they are based. IBM will use the service as its preferred software development platform, while Catapulse has made IBM its preferred partner for Web hosting, hardware, software and systems integration services.

Catapulse is not the first company to introduce Internet-enabled collaborative development. Another startup, CollabNet Inc, is growing fast by enabling online collaboration between open source developers, while enterprise development tools vendor Merant launched an ASP service in September. See related ASP News story on internetnews.com, Merant Touts Software Development the ASP Way, Sep 13th 2000.

But Catapulse is especially noteworthy because its founders are Paul Levy and Mike Devlin, the original co-founders of leading development tools vendor Rational Software Corp. Rational is the creator of the Unified Modeling Language, an industry standard that is the foundation of software development automation. It has backed Catapulse with $50m first-found funding, while Benchmark Capital contributed a further $25m.

Despite this week's launch, Catapulse is remaining tight-lipped on its strategic direction. But looking at its tight relationship with Rational, the inference to draw is that a primary aim of Catapulse is to enable automated software development as an online service — which would unleash nothing short of an industrial revolution in software creation. Keep an eye on this company; it could change the world.

This review of the week's news highlights is by ASPnews.com founder and managing editor Phil Wainewright. A comprehensive news digest is published every month in the ASP News Review newsletter, available exclusively to subscribers.