VERT is a BUY !,,,According to International Data Corp. the B2B e-commerce industry is expected to grow from $200 billion in 2000 to $2.5 trillion in 2004.
"I think that with all the B2B attention in the last year, that the market took its eye off the ball in terms of quality," said Garner.
FreeMarkets Chairman and CEO Glen Meakem agrees. "I think there's been so much hype in the B2B space, and there have been frankly some very low quality companies that have gotten huge market caps, and on the surface it seems like they're doing well. Suddenly they're getting hammered, we're all getting hammered, but I think the market needs to sort out the quality companies from the air," said Meakem.
Picking the winners
Although analysts and B2B execs weren't about to predict if the glory days would return, they did agree on what would determine the winners from the losers.
Once investors catch their collective breath, analysts said some common sense will return to the B2B market.
According to Walravens, winning B2B companies will have three major traits: They will sell the picks and shovels for the B2B rush, be connected at the hip with Fortune 500 companies, and automate processes for industry partners.
As for the flap over transaction revenue, Walravens said he thinks the worries are overblown. Transaction revenue wasn't going to last, he said. Besides, the likes of Oracle (Nasdaq: ORCL) and i2 Technologies (Nasdaq: ITWO) have proven the software business can be lucrative. In addition, there's no guarantee that high-profile B2B joint ventures between industry giants -- many of which hate each other -- will work.
Walsh said it also helps to have a well-heeled partner. VerticalNet has a deal with Microsoft (Nasdaq: MSFT), while DuPont and Internet Capital Group (Nasdaq: ICGE) have a partnership.
Walsh said diversified revenue streams will also determine winners. VerticalNet has advertising, licensing, sponsorship and transaction revenue, and spreads its focus across multiple verticals. VerticalNet's diversification strategy keeps it out of the way of big old-economy companies that will cut out the middleman.
"There are thousands of mid-sized companies that need our help," said Walsh. "I'd say B2B has room for a lot of businesses. Stay tuned."
The comeback
Did investors start poring over business models after B2B shares bottomed out last week? Hardly.
Wall Street is playing momentum and B2B shares are back in favor. The trading action this week indicates that B2Bs may have bottomed out.
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