Excerpt from the Motley Fool about today's earnings. I really do not see these lawsuits having any merit whatsoever. Looks like more than 1/2 of the GM business was Delphi, and they just announced a new deal with FMKT, so why everyone is so up-tight about losing the GM business is beyond me. Right now FMKT is selling off badly, but on about 200 K shares. Stock is very volatile, but this doesn't look like widespread selling to me. Once Greenspan raises rates, I would look for the Nasdaq to settle down.
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BREAKFAST WITH THE FOOL
Monday, January 31, 2000
"In the life of one man, never the same time returns."
-- T.S. Eliot
FreeMarkets Gaining Clients, Suppliers, Speed
By Richard McCaffery (TMF Gibson)
Online business materials auctioneer FreeMarkets (Nasdaq: FMKT) reported that revenues soared 161% to $7.8 million in the fourth quarter, compared to $3 million a year ago, as the Pittsburgh-based company broadened its client base, added new supply markets, and conducted auctions for almost $1.4 billion of materials and services.
Revenue increased 46% sequentially, from $5.4 million in the September quarter. FreeMarkets reported a net loss for the quarter of $8.3 million, or $0.26 per pro forma diluted share, a nickel better than expected.
If you're interested in the power of the Internet and how it can change the way companies do business, it's worth taking a look at FreeMarkets. The company conducts online auctions on behalf of customers to help them acquire raw materials, commodities, and services.
Since 1995 the company has held business auctions for over 30 clients in more than 50 product categories, including commercial machine parts, metal fabrications, chemicals, and printed circuit boards. It has more than 3,000 supplier participants in more than 45 countries, and typically saves clients from 2% to more than 25% on the cost of products.
Of course, the company has yet to turn a profit and operates in a volatile market that's still in its infancy.
Still, FreeMarkets had a firecracker of an initial public offering, selling shares December 9 at $48 apiece. Its stock rocketed 483% to close its first day of trading at $280 as the Nasdaq market surged in the fourth quarter and business-to-business e-commerce companies rode the wild gains.
The shares lost a little luster January 4 when General Motors (NYSE: GM), FreeMarkets' second-largest customer, announced it would move its online auction business to rival Commerce One (Nasdaq: CMRC) as a result of a new business partnership. Almost overnight FreeMarkets' shares fell from around $350 to about $163.
Since then, the shares have rallied to about $270. FreeMarkets has said General Motors accounted for 10% of FreeMarkets' fourth-quarter revenue, and the company doesn't expect the move to affect its revenues in the coming year. Why? We learned more about that in today's announcement.
About 60% of FreeMarkets' GM-related revenue came from Delphi Automotive Systems (NYSE: DPH), the world's largest automotive parts company, spun off by GM in February 1999. On January 20, Delphi signed a new agreement with FreeMarkets that goes through 2000. The company doesn't expect the GM deal to have any bearing on its Delphi business.
At the rate FreeMarkets is adding clients and suppliers, the GM revenues will soon be a distant memory. The company has served 34 customers through its auctions, up from 6 a year ago and 18 in the quarter ended last September. |
