CMRC News
(from Deanayer on YHOO thread)
GM to Shift Internet Auctions From FreeMarkets (Update1)
GM to Shift Internet Auctions From FreeMarkets (Update1)
(Adds background starting in 9th paragraph; updates shares.)
Detroit, Jan. 3, (Bloomberg) -- A General Motors Corp.
executive said the world's largest automaker will pull all its
business-to-business auctions from FreeMarkets Inc., an online
auction company that gets much of its sales from GM.
GM will shift the business to FreeMarkets rival Commerce One
Inc., GM TradeXchange director Alan Turfe said in an interview
Thursday on www.radiowallstreet.com. FreeMarkets, whose shares
have risen more than sevenfold since it sold stock to the public
Dec. 10, had cautioned in U.S. Securities and Exchange Commission
filings that GM could make such a move.
``Although FreeMarkets has done a fine job, that auction and
reverse auction functionality is going to be migrated 100 percent
to Commerce One,' Turfe said in the Internet interview. He
didn't give a time frame for the move.
The decision ``raises potential questions when it comes to
FreeMarkets' valuation, particularly in light of what appears to
be stronger competitors such as Commerce One,' said David
Garrity, a Dresdner Kleinwort Benson analyst in New York who has
a ``buy' rating on Commerce One.
GM and United Technologies Corp. accounted for 58 percent of
FreeMarkets' $13 million in revenue for the first nine months of
last year. The auction companies compete to help automakers and
other types of businesses cut costs by buying and selling
products via the Internet.
FreeMarkets spokeswoman Karen Kovatch declined to comment on
losing GM's business, saying the Pittsburgh-based company is
``still in a quiet period' following its IPO. GM spokesman David
Barnas said GM wouldn't comment beyond Turfe's statement.
Share Activity
FreeMarkets shares rose 9/16 to 341 7/8 today after earlier
trading as high as 370. The company sold 3.6 million shares to
the public at $48 a share in December.
Commerce One shares rose 7 1/8 to 203 5/8. It rose as much as
5 3/8 to 208 in trading after the close of U.S. markets. The
Walnut Creek, California, company sold its stock to the public at
$21 a share in July and split 3-for-1 last month.
Commerce One signed an agreement in November with GM to
provide software and services to help GM create an Internet
marketplace with its suppliers. Through this marketplace, GM and
its suppliers can buy goods and services online, conduct auctions
and bid for materials.
Commerce One shares surged 23 percent the day after the
agreement was announced and investors snapped up the stock on
prospects that the endorsement from General Motors would help the
company close more agreements.
Commerce One has risen more than 2,800 percent since its
initial stock sale.
Turfe said it was logical that GM would funnel all its
online auctions through the Commerce One because the automaker
has a 19.9 percent stake in the company.
Rival Ariba Inc., which also sells software to process
orders online, has been playing catch-up with Commerce One. It
recently acquired closely held Tradex Technologies Inc. for $1.97
billion in stock so companies can set up networks to buy and sell
products and services themselves, rather than having Ariba manage
the transactions.
NYSE/AMEX delayed 20 min. NASDAQ delayed 15 min. |
