USi CEO steps down

Christopher R. McCleary, the start-up wizard who has run two of Maryland's fastest-growing digital economy companies, stepped down yesterday as chief executive officer of his latest venture, USinternetworking Inc. He said he will direct the company's expansion effort amid intense competition.

The Annapolis-based company, which leases and manages business software over the Internet, said the 47-year-old executive remains chairman of the board. McCleary will also head up a new committee charged with seeking "strategic opportunities" for USi, the company said.


Andrew Stern, USi's chief operating officer, was named the new CEO.

Stern joined the company as chief financial officer in 1998 from USF&G; Corp., the Baltimore-based insurance company that is now part of St. Paul Cos. Inc. The 43-year-old executive was credited yesterday with helping launch the company's successful initial public offering in April 1999, which raised $145 million.


"I'm as excited as can be to head up this remarkable company," Stern told analysts and investors yesterday in a conference call. "We have the potential to be a billion-dollar company."

He said as CEO his top priority would be ensuring quality service as the company grows. "Client service is the key," he said.

Stern said he would also focus on improving operating margins for the company, and enhancing the company's reputation as an attractive place for "technology leaders" to work. USi employs 1,400 nationwide, 800 at its Annapolis headquarters.

McCleary said that he and the company's board decided that with more global corporations turning to companies such as USi - called application service providers, or ASPs - for their business software needs, he should focus on long-term strategies and opportunities.

One area of interest, said McCleary, are partnerships or other opportunities for USi to expand internationally.

The emerging ASP industry is growing hotly competitive, with new vendors offering to provide and manage a wide range of business software for monthly fees. An estimated 400 ASPs were started in the past four years.

The service relieves corporations of the headaches of managing and updating software critical to their business operations, such as the popular PeopleSoft human resources program or SAP's manufacturing-planning software.

Analysts predict that the industry could emerge as a multibillion dollar revenue generator this decade.


USi plans to release its second-quarter earnings today after the stock market closes. For its first quarter, USi reported a $39.6 million net loss on revenue of $17.8 million.

McCleary co-founded USi in 1998. It was at the time one of the first companies to provide and manage business software services over the Internet via a data network facility in Annapolis.

McCleary started USi after leaving Digex Inc. in 1997.

He resigned from the Beltsville business Internet service provider, which he ran during a fast-growth period, when it was bought for $150 million by Intermedia Communications Inc. of Tampa, Fla.

Shares in USi closed yesterday at $18.88, down 44 cents.