The following quote is taken from an article by D. Geller dated 5/2/2000 and was published by Technology Evaluation.
>>>>FreeMarkets, Inc. (NASDAQ: FMKT) runs a marketplace that enables large competitive auctions for the purchase of industrial parts and raw materials. Unlike most digital market makers whose goal is to create completely digital marketplaces,FreeMarkets provides value by combining technology with labor-intensive services.
When buying a thousand rolls of standard sized paper towels it is efficient to look in a catalog and choose vendors based on price, delivery times, and reputation. When buying millions of cubic feet of natural gas or a family of PC boards, a different approach is definitely called for.
FreeMarkets works with purchasers to help them craft detailed product specifications. These requests are prepared by specialists in the product, materials, or service being acquired. Preparation of a specification might take between four and ten weeks. FreeMarkets also helps buyers identify potential bidders on the contract. FreeMarkets then works with the suppliers to train them in the use of the system.<<<
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Labor-intensive services, that's the key. The only exception to the above quote I would take is that the "auction" is for the solicitation of bids, not for the purchase. The low bidder doesn't necessarily get the order, and negotiations often continue after the "acution" is closed. But this is a detail that brings into question the term "eMarketplace", and the FMKT "spin".
The much more important point is the "labor intensive" nature of the work FMKT does for their clients.
FMKT is a consulting company with a gimmick, gang. I would add interesting consulting company and even useful consulting company.
But they have no Internet leverage. Without leverage, one has to question when FMKT will break even, let alone generate the earnings required in the future to justify the current valuation. A blind rush for sales growth only works if you have leverage. |
