What's interesting about FreeMarkets Inc is that it isn't strictly an Internet stock, or even a tech stock.
Their auctions only last a few hours and are strictly limited to a set of invited and rigourously pre-qualified industrial suppliers, who bid anonymously against each other in a reverse auction while the buyer, aided by FreeMarkets staff, looks on hoping this process will drive down the price, which it typically seems to do. In other words, this doesn't make use of the mass communication and agglomeration benefits that the Internet provides in the same way that, say, EBAY or PCLN does, because it doesn't need to.
FreeMarkets says that in the industrial categories in which they are active, this sort of dynamic, real time competitive market is normally absent, especially because many suppliers and buyers are locked into cozy long term relationships that aren't open or conducive to price competition.
The actual auction technology, while being specialized, seems to be secondary here, and if I'm understanding this correctly, a FreeMarket auction could in theory be implemented using a conference call rather than an electronic network. The main product here seems to be the business _process_ that FreeMarkets has developed to organize the auction, pre-qualify the suppliers and their offerings, and then get them together all at once in real time with the buyer on a "level playing field" (rather than over the usual well-done steak). Unlike an EBAY-style auction, the FMKT model is actually highly labor intensive because working with the buyers to determine their needs, preparing the suppliers and researching their products to see if they meet the buyer's request for quote (RTQ) has to be done by well qualified people.
Like I said, pretty interesting stuff.
I can see them wanting to move the IPO to a later week so as not to get overshadowed by the other IPOs this week (if that was indeed the reason). At the same time, IPO mania is currently in full swing (especially for business-to-business e-commerce and network plumbing). Perhaps by the week of Dec 6th some of that mania will have dissipated as the proximity of the Y2K change might start to drain liquidity from the market and reduce volume as people generally look to conserve cash in case there's a run on the banks or a market correction. Which might provide a more sensible opening ticker for FMKT than we could have expected this week. |
