B2B fever hits Net stocks Building blocks of e-commerce soar; Elcom gains 78%
cbs.marketwatch.com YORK (CBS.MW) -- Internet stocks fell Tuesday but not without a wild ride as investor desire for business-to-business, e-commerce stocks sent shares of B2B companies on a rollercoaster run.
Shares of tiny Elcom International (ELCO: news, msgs) jumped 78 percent on expectations it will spin off its Web unit while shares of Ariba (ARBA: news, msgs) and Commerce One (CMRC: news, msgs) sprinted ahead in the early going only to end the day flat or lower. Commerce One shares took off again in after hours trading. See Indications.
The enthusiasm for B2B e-commerce firms initially helped to pull up overall Net averages. The 17-stock Goldman Sachs Internet Index rose to 728, before ending the session with a 1 percent loss at 703.
The Amex Internet Index lost 0.3 percent, after ending Monday's session barely unchanged. The broader tech-laden Nasdaq ($COMPQ: news, msgs) ended with a 0.1 percent loss. See Silicon Stocks.
The Net favorites were mixed. America Online (AOL: news, msgs) ended the day 2 3/16, or 3 percent, to 76 1/2, after losing 2 5/16 on Monday. EBay (EBAY: news, msgs) turned around some of Monday's 8 5/16 loss, jumping 5 7/8 to 139 7/8.
Yahoo (YHOO: news, msgs) gave up 24 3/4 to 390 1/4, after adding 3 percent Monday on speculation the Net blue chipper would soon announce a stock split. The last time Yahoo announced a stock split was on January 12, 1999, the same day Yahoo reported its fourth quarter results for '98. Yahoo reports fourth quarter results on January 11 of next year.
Today on CBS MarketWatch
Dow leaves Nasdaq behind
Net Stocks: B2B takes the day
Consumers in jolly mood
Private investors to buy Jostens
StockWatch: The January effect, Part II
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CBS MarketWatch Columns
Updated:
12/28/1999 5:31:08 PM ET
CMGI (CMGI: news, msgs) gave up 10 1/8, or 4 percent, to 268; Internet Capital Group (ICGE: news, msgs) and Safeguard Scientifics (SFE: news, msgs) trimmed their earlier losses.
Inktomi (INKT: news, msgs) gained 5 percent to 191 1/2; Exodus (EXDS: news, msgs) added 1 1/2 to 85 13/16. Dain Rauscher Wessels upped its price target by 53 percent to $115.
Finding value?
But Elcom International (ECLO: news, msgs) rose 16, or 78 percent, to 36 1/2. Elcom is a former PC re-seller turned B2B software procurement company. Shares had traded at $10 earlier this month. See full story. The company had said that it's considering an IPO of Elcom.com, the company's e-procurement software unit.
On Dec. 1, Tim Stobaugh, an analyst at Stonegate Securities in Dallas, said "a case can be made that Elcom hasn't reached the same comparable valuation of Ariba, Commerce One and PurchasePro." See earlier story. Stobaugh had a $20 price target when he made those comments.
But ninety-five percent of Elcom's total quarterly sales of $91 million came from re-selling personal computers, according to Stobaugh. Even though Elcom has a few solid clients, revenues are declining as the company makes a transition from re-selling PCs to e-commerce. Stobaugh projects Elcom's sales to fall from $484 million this year, to $300 million in 2000.
Now, Elcom sports a market valuation of over $1 billion; a smidgen of Ariba's $16 billion. But based on a simple price-to-customer metric, it appears that investors are valuing Elcom's customers at roughly $100 million each. On December 17, Ariba announced its plans to buy Tradex Technologies for $1.86 billion. With the acquisition, Tradex added 18 customers to Ariba's approximately 100 customers, a back-of-the-envelope calculation suggested that Ariba gave Tradex roughly what the public markets were valuing each of its own customers.
At current market prices, Ariba's customers are valued at some $135 million. But this doesn't mean that Elcom is undervalued since customers are not created equal.
Ariba's customers should be valued at a premium. "I wouldn't say Elcom is undervalued," said Ian Morton, an Internet analyst at Hambrecht & Quist. "Investors need to know how predictable the business model is, who the partners are to augment sales, and how quickly the company can scale because the ultimate winners will be the ones that get big fast."
Still, looking at customer metric for guidance is a worthy exercise, said Morton.
On the heels of Elcom's run-up, shares of Concur Technologies (CNQR: news, msgs) and Clarus (CLRS: news, msgs) rose as well on Nasdaq. Concur gained a hearty 7 5/8, or 32 percent, to 31 5/8. Clarus jumped 14 5/8, or 26 percent, to 71.
"A rising tide lifts all boats," said Morton. And that tide will keep rising, he said. "These markets are going to develop and run," he added. While Morton doesn't believe all 41 public and private companies he tracks will survive, at the moment the industry still has sizable upside.
PurchasePro shrugged off early morning weakness, jumping 16 3/16, or 11 percent, to 158 3/8; Ariba gained 1/4 to 183, after a 20 3/4 sprint Monday. See Net trends 2000.
FreeMarkets (FMKT: news, msgs) reflects the insatiable public demand for these stocks. After one week in the public market -- it commanded a valuation of $11 billion, far greater than the $1.6 billion raised in its IPO through lead banker Goldman Sachs. The Pittsburgh-based company, which offers procurement auctions, traded at 315 3/4 back then.
The stock had since fallen to 267, only to climb back, rising 23 1/4, or 9 percent, to 292 1/2 on Tuesday. See B2B story.
E-marketing Trend
A new report by Forrester Research highlights the significance of mining "visitor profiles and online behavior," as opposed to merely counting page views. To measure "visitor experience," which should ultimately be the business objective, firms need a robust Web intelligence model capable of "accommodating new strategies and technologies," according to the report.
But there are no companies with a complete toolbox of Web intelligence tools, according to Forrester.
Post comments about Net stocks at the Internet Discussion Group page.
Bambi Francisco is Internet editor for CBS MarketWatch. She talks stocks and the Net on America Online's Live Market Chat each Wednesday at 12 p.m. Eastern Time. Sage Online runs the discussion.
NEW YORK (CBS.MW) -- Internet stocks fell Tuesday but not without a wild ride as investor desire for business-to-business, e-commerce stocks sent shares of B2B companies on a rollercoaster run.
Shares of tiny Elcom International (ELCO: news, msgs) jumped 78 percent on expectations it will spin off its Web unit while shares of Ariba (ARBA: news, msgs) and Commerce One (CMRC: news, msgs) sprinted ahead in the early going only to end the day flat or lower. Commerce One shares took off again in after hours trading. See Indications.
The enthusiasm for B2B e-commerce firms initially helped to pull up overall Net averages. The 17-stock Goldman Sachs Internet Index rose to 728, before ending the session with a 1 percent loss at 703.
The Amex Internet Index lost 0.3 percent, after ending Monday's session barely unchanged. The broader tech-laden Nasdaq ($COMPQ: news, msgs) ended with a 0.1 percent loss. See Silicon Stocks.
The Net favorites were mixed. America Online (AOL: news, msgs) ended the day 2 3/16, or 3 percent, to 76 1/2, after losing 2 5/16 on Monday. EBay (EBAY: news, msgs) turned around some of Monday's 8 5/16 loss, jumping 5 7/8 to 139 7/8.
Yahoo (YHOO: news, msgs) gave up 24 3/4 to 390 1/4, after adding 3 percent Monday on speculation the Net blue chipper would soon announce a stock split. The last time Yahoo announced a stock split was on January 12, 1999, the same day Yahoo reported its fourth quarter results for '98. Yahoo reports fourth quarter results on January 11 of next year.
Today on CBS MarketWatch
Dow leaves Nasdaq behind
Net Stocks: B2B takes the day
Consumers in jolly mood
Private investors to buy Jostens
StockWatch: The January effect, Part II
More top stories...
CBS MarketWatch Columns
Updated:
12/28/1999 5:31:08 PM ET
CMGI (CMGI: news, msgs) gave up 10 1/8, or 4 percent, to 268; Internet Capital Group (ICGE: news, msgs) and Safeguard Scientifics (SFE: news, msgs) trimmed their earlier losses.
Inktomi (INKT: news, msgs) gained 5 percent to 191 1/2; Exodus (EXDS: news, msgs) added 1 1/2 to 85 13/16. Dain Rauscher Wessels upped its price target by 53 percent to $115.
Finding value?
But Elcom International (ECLO: news, msgs) rose 16, or 78 percent, to 36 1/2. Elcom is a former PC re-seller turned B2B software procurement company. Shares had traded at $10 earlier this month. See full story. The company had said that it's considering an IPO of Elcom.com, the company's e-procurement software unit.
On Dec. 1, Tim Stobaugh, an analyst at Stonegate Securities in Dallas, said "a case can be made that Elcom hasn't reached the same comparable valuation of Ariba, Commerce One and PurchasePro." See earlier story. Stobaugh had a $20 price target when he made those comments.
But ninety-five percent of Elcom's total quarterly sales of $91 million came from re-selling personal computers, according to Stobaugh. Even though Elcom has a few solid clients, revenues are declining as the company makes a transition from re-selling PCs to e-commerce. Stobaugh projects Elcom's sales to fall from $484 million this year, to $300 million in 2000.
Now, Elcom sports a market valuation of over $1 billion; a smidgen of Ariba's $16 billion. But based on a simple price-to-customer metric, it appears that investors are valuing Elcom's customers at roughly $100 million each. On December 17, Ariba announced its plans to buy Tradex Technologies for $1.86 billion. With the acquisition, Tradex added 18 customers to Ariba's approximately 100 customers, a back-of-the-envelope calculation suggested that Ariba gave Tradex roughly what the public markets were valuing each of its own customers.
At current market prices, Ariba's customers are valued at some $135 million. But this doesn't mean that Elcom is undervalued since customers are not created equal.
Ariba's customers should be valued at a premium. "I wouldn't say Elcom is undervalued," said Ian Morton, an Internet analyst at Hambrecht & Quist. "Investors need to know how predictable the business model is, who the partners are to augment sales, and how quickly the company can scale because the ultimate winners will be the ones that get big fast."
Still, looking at customer metric for guidance is a worthy exercise, said Morton.
On the heels of Elcom's run-up, shares of Concur Technologies (CNQR: news, msgs) and Clarus (CLRS: news, msgs) rose as well on Nasdaq. Concur gained a hearty 7 5/8, or 32 percent, to 31 5/8. Clarus jumped 14 5/8, or 26 percent, to 71.
"A rising tide lifts all boats," said Morton. And that tide will keep rising, he said. "These markets are going to develop and run," he added. While Morton doesn't believe all 41 public and private companies he tracks will survive, at the moment the industry still has sizable upside.
PurchasePro shrugged off early morning weakness, jumping 16 3/16, or 11 percent, to 158 3/8; Ariba gained 1/4 to 183, after a 20 3/4 sprint Monday. See Net trends 2000.
FreeMarkets (FMKT: news, msgs) reflects the insatiable public demand for these stocks. After one week in the public market -- it commanded a valuation of $11 billion, far greater than the $1.6 billion raised in its IPO through lead banker Goldman Sachs. The Pittsburgh-based company, which offers procurement auctions, traded at 315 3/4 back then.
The stock had since fallen to 267, only to climb back, rising 23 1/4, or 9 percent, to 292 1/2 on Tuesday. See B2B story.
E-marketing Trend
A new report by Forrester Research highlights the significance of mining "visitor profiles and online behavior," as opposed to merely counting page views. To measure "visitor experience," which should ultimately be the business objective, firms need a robust Web intelligence model capable of "accommodating new strategies and technologies," according to the report.
But there are no companies with a complete toolbox of Web intelligence tools, according to Forrester.
Post comments about Net stocks at the Internet Discussion Group page.
Bambi Francisco is Internet editor for CBS MarketWatch. She talks stocks and the Net on America Online's Live Market Chat each Wednesday at 12 p.m. Eastern Time. Sage Online runs the discussion.
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