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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: bobkansas who wrote (16213)	12/4/1999 8:50:00 AM
From: DlphcOracl	Read Replies (1) \| Respond to of 57584

BOB MARTIN USA: By far, the best articles I have seen written on B2B stocks is by briefing.com. You must be a subscriber to access these articles (although you could sign on for a free trial and access this way). It is one on the few paid sites that I think is well worth the money and it is not expensive ($70 per year). You can access with this link: briefing.com, then click under the section or heading labelled: "Stock Briefs". They are currently running an extensive review of the B2B sector with four sections already published. I'll shamelessly plug Briefing.com; I think they have excellent, balanced analysis with many good stock and trading tips. I hope Rande Is readers will support their site; they complement Rande Is' comments and analysis nicely.

To: bobkansas who wrote (16213)	12/4/1999 12:30:00 PM
From: herringbone_100	Respond to of 57584

BRIEFING.COM - Gregory A. Jones] --Weekend Special-- Time to crank up our B2B series -- in the coming few weeks, we will be looking at the subsectors and companies in the business-to-business world. As with all things Internet, defining who is and who is not a B2B company is more art than science. So before getting into specifics, we must first design our plan of attack. We are aware of the confusion that surrounds the B2B designation, so let's be clear on the Briefing.com rules of thumb. B2B companies are those that do one or more of the following: Develop software that facilitates B2B transactions Create marketplaces for B2B transactions Offer content that facilitates B2B transactions Sell goods and services to businesses online Some of the broader B2B definitions include companies that sell software to businesses, even if that software is not used for B2B purposes. Ask Jeeves (ASKJ) and Tibco (TIBX) are two examples. But these companies do not directly or indirectly focus on B2B transactions. The same is true of Internet services companies such as Viant (VIAN) and Scient (SCNT). Both sell their services to business, but the services they offer may or may not be related to B2B transactions. Let's be clear on one point: it is the expected boom in online B2B transactions which is producing the tremendous valuations of the few publicly traded B2B pure plays. When Briefing.com discusses B2B companies, we will focus on the companies that will benefit from these transactions. Listed below are the B2B subsectors and the companies within each subsector. And following each of these listings is a brief explanation of each subsector. CRM Commerce/Customer Service: Art Technology (ARTG), BroadVision(BVSN),InterWorld (INTW), Primus Knowledge (PKSI), Silknet Software (SILK), Vignette (VIGN). By facilitating ecommerce, the companies in the CRM space are participating in both the B2B and B2C (business-to-consumer) sectors. It is for this reason that we do not consider them pure plays on B2B. But even though they are not pure-plays, their stocks have clearly been participating in the B2B boom. Soon to be added: Allaire (ALLR), once it releases its new Spectra product that will compete with VIGN and BVSN. CRM Marketing/Email: Broadbase Software (BBSW), eGain Communications (EGAN), e.piphany (EPNY), Kana Communications (KANA), Net Perceptions (NETP). These niche CRM players are even more dubious when it comes to a B2B designation. Most of their software functionality is targetted at the B2C market, but these companies nevertheless deserve a mention when discussing B2B. Horizontals: Agile Software (AGIL), Ariba (ARBA), Clarus (CLRS), Commerce One (CMRC), Concur Tech (CNQR), PurchasePro.com (PPRO), VerticalNet (VERT). Now we enter the pure B2B realm. These companies develop content, software and/or marketplaces that facilitate B2B transactions across a wide range of industries. Soon to be added: FreeMarkets (FMKT), following its IPO expected in December. Verticals/Technology: Calico Commerce (CLIC), pcOrder.com (PCOR). Verticals are the same as horizontals in that they develop content, software and/or marketplaces that facilitate B2B transactions. But verticals target a specific industry; in this case technology. Neither of these companies is a clear choice for this subsector -- CLIC could be considered a CRM company, but most of its business is B2B, while PCOR is expanding from the computer industry into office supplies and may eventually become a horizontal. Verticals/Healthcare: Allscripts (MDRX), CareInsite (CARI), Claimsnet.com (CLAI), Healtheon/WebMD (HLTH), TriZetto (TZIX). A huge vertical, one that is hotly contested, and one that will be very difficult to conquer given the current state of affairs in the healthcare industry. Verticals/Life Sciences: Chemdex (CMDX), SciQuest.com (SQST). This vertical is one in which knowledge of the industry is crucial to success, and customers, once they are acquired, are likely to remain loyal. Profit margins are low as these companies both maintain inventories, but should rise over time as volume discounts on purchases are achieved. Verticals/Retail: Retek (RETK). This HNC Software spin-off focusses on software to promote supply chain collaboration -- in other words, it is not yet benefitting significantly from B2B retail transactions. We have nevertheless included RETK, as it is attempting to facilitate transactions via its Retail.com portal. Sales/Technology: Elcom (ELCO), Intraware (ITRA). We differentiate between companies that develop content, software, and transaction services in various verticals and companies that simply sell products or services directly to businesses. These sales companies are in the B2B space, but by not becoming involved in the overall growth in B2B transactions, their upside potential is more limited. In the technology sector, we have Elcom (which is also working to become a vertical with its PECOS procurement system) and Intraware, which sells software and related services. Sales/Employment Svcs: Headhunter.net (HHNT), HotJobs.com (HOTJ), Tobjobs.net(TJOB). Helping employers find employees is a big business, but not one where any company can win much customer loyalty and the pricing power that loyalty brings. In short, not a very exciting sector. Sales/Postage: E-Stamp (ESTM), Stamps.com (STMP). Given the technological barriers to entry, selling postage online may be a business with better profit margins than most B2B sales sectors, but proof of concept has yet to be seen. Miscellaneous Sales: Printing: Imagex.com (IMGX). Subscription Svcs: Rowecom (ROWE). Legal Documents: Loislaw.com (LOIS). Mortgage Brokerage: Finet.com (FNCM). Accounting Management: ResourcePhoenix.com (RPCX). Travel: GetThere.com (GTHR). Most of these speak for themselves -- not very interesting areas given the generally low profit margins and lack of pricing power, but some profitable companies will emerge from this group. You will note that we did not include many older companies that are attempting to move into the B2B space, such as Sterling Commerce (SE), Open Market (OMKT), Harbinger (HRBC), and HNC Software (HNCS), to name a few. We are focussing only on pure plays. In cases such as Retek, which was a spin-off of HNC Software, we will include the spin-off company if it is a pure, web-based company. Now that we know the subsectors and the players, our analysis of the individual companies can begin, starting with the CRM companies.

To: bobkansas who wrote (16213)	12/4/1999 12:34:00 PM
From: herringbone_100	Read Replies (1) \| Respond to of 57584

A follow-up on B2Bs from Briefing.com B2B - The Deals 04-Nov-99 00:13 ET [BRIEFING.COM - Gregory A. Jones] Our last look at the business-to-business (B2B) sector identified the different subsectors within B2B and mentioned some of the key players in the groups. With the recent flurry of deals in the B2B world, it's time to get more focused. Today, we look at those deals and their implications for the future of B2B. Commerce One + General Motors Announced on Tuesday, this is the first of two important deals involving the auto sector. Commerce One (CMRC) will develop GM MarketSite, which will be an online marketplace linking General Motors (GM) and its 30,000 suppliers. This is bigger than just a market where GM will purchase from suppliers -- suppliers can also complete transactions with each other in this marketplace. This deal has several important implications. * There were concerns that Fortune 500 companies might be slow to adopt B2B, but when stodgy GM dives in head-first, you have to believe that these concerns were unwarranted. GM VP Harold Kutner referred to his company as "e-GM" in the press release -- if ever there was an indication that corporate America believes in ecommerce, that was it. * Another threat to B2B companies was that industries dominated by a handful of firms would see those leading companies attempt to set up their own online markets, bypassing the B2Bs. Yet the auto industry is the perfect example of an industry in which the leaders had the power to set up their own markets, and in the two deals announced yesterday, two of the Big 3 went to B2B companies for help. That's great news for the B2B sector. Oracle + Ford The second of the auto deals was interesting for the same and different reasons. Oracle (ORCL) and Ford (F) announced a venture whose goal was the same as the CMRC/GM deal -- to link the automaker and its suppliers in an online marketplace. For the same reasons mentioned above, the ORCL/F deal is positive for the B2B companies. But the fact that Oracle is the partner in this deal yields new observations. * B2B pure plays face stiff competition from existing enterprice resource planning (ERP) software providers such as Oracle (ORCL), Peoplesoft (PSFT), and SAP (SAP). B2B pure play companies such as ARBA and CMRC no doubt hoped that just as Amazon.com zoomed past Barnes & Noble, they could bypass the existing ERP companies if the ERPs suffered from perceptions that they were not sufficiently nimble to reposition themselves for the challenge of B2B ecommerce. * With its high profile Ford venture, Oracle has just made it clear that the ERP companies are a threat. PSFT and SAP look to be laggards in this area, but Oracle is being very aggressive and will be a formidable competitor for ARBA and CMRC. The pie is probably big enough for the leading companies to all come out ahead, but B2B pure plays will share, not own, this market. For Oracle, the possibility of breaking into B2B marketplaces represents a tremendous opportunity which its stock price does not fully reflect. PurchasePro.com + VerticalNet First, we would note that we consider both PPRO and VERT to be second tier B2B companies. PPRO is a direct competitor of ARBA and CMRC in creating online markets, but its partnerships are not of the same blue chip variety as ARBA and CMRC, and it has thus far not extended far beyond its roots in the gaming/hotel industry. VERT, on the other hand, has extended its reach across 51 industries, but has an advertising model that does not offer the same upside potential as a transactional slice model (taking a cut of transactions which occur in an online marketplace). On Wednesday, PPRO and VERT announced a deal that makes a great deal of sense -- VERT will license PPRO software to develop markets to complement its industry-specific content and community. VERT gets the marketplace it needed, and PPRO gets the expanded industry-reach that it needed. That's the good news, but it leads us to a broader observation. * VERT and PPRO represent the threat from below -- they are playing catch-up. In the business-to-consumer (B2C) sector, we saw that the followers never caught the leaders. VERT/PPRO, even with this deal, are likely to be followers, with ARBA, CMRC, and ORCL leading. This deal does give them a chance to move into the top tier of B2B players, and certainly a much better chance than either had prior to this deal. But as was the case in B2C, first-mover advantage and the partnerships that it brings will be critical. You don't see PPRO doing deals with the Big 3 automakers. pcOrder.com + E-Commerce Industries This is the oldest of our deals -- pcOrder (PCOR) announced back on October 11 that it had teamed with E-Commerce Industries to develop an ecommerce platform for the office supplies industry. Prior to that announcement, PCOR had focussed quite successfully on the computer industry. Their expansion into office products prompts our final observation. * Everyone wants a piece of the horizontal pie, but there are different ways of approaching it. ARBA and CMRC are trying to get it all at once -- verticals such as PCOR are attacking it one piece at a time. PCOR proved its business model in the computer industry and is now taking it to office supplies. Leading horizontal players could find that verticals which promise expertise in a given sector will attract much of the business within that sector, leaving less for the horizontals. Tying It Together * The auto deals indicate that the business for B2B companies from corporate America will come faster than expected and from all industries. * The Oracle deal highlights the fact that ERP companies will be competing aggressively with B2Bs for these deals. * The PPRO/VERT deal, while positive for those companies, highlights the first mover advantage enjoyed by ARBA, CMRC, and even ORCL. * The PCOR deal indicates that vertical players with industry expertise have longer term horizontal potential. The bottom line? If you want to invest for the long term in this sector, there are a few rules. First and foremost, you must be willing to tolerate one-day declines of 20-30%. These stocks will be volatile and there will be bad days. Very bad days. Second, follow a rule that has always worked with the Internet -- go with the leading companies in the leading B2B sectors. In this case, the leaders in the horizontal space are ARBA, CMRC, and ORCL, and the current leader in the vertical space is PCOR. We would take these over the lagging companies, and we would also take them over the leaders of less compelling B2B sectors such as the many procurement sites. These include Intraware (ITRA), Imagex (IMGX), and Loislaw.com (LOIS) -- these are all companies that sell goods and services to businesses via the Net -- they do not create online marketplaces. Some will be successful, but they are susceptible to the afflictions hitting the B2C sector -- rabid price competition and falling profit margins. Companies creating horizontal and vertical marketplaces will have high and defensible profit margins if they gain critical mass. B2B horizontals and verticals are to procurement sites what eBay (EBAY) is to Buy.com (private). The former has gained the critical mass in the consumer auction market and can therefore sustain very high profit margins. The latter is forced through the lack of consumer loyalty and intense competition to accept negative profit margins. Which would you rather own? Extreme, but... The valuations of the horizontals and verticals are extreme. But the B2B market has the potential to be incredibly lucrative, particularly for companies that can take a slice of transactions from their online marketplaces. For the winners, there is a multi-billion pot of gold at the end of the rainbow, one that will ultimately justify their valuations. Greg Jones - gjones@briefing.com P.S. Another B2B leader is coming to market soon -- FreeMarkets, a provider of B2B auctions, is slated to go public in the week of November 8. This is another blue chip horizontal, with Goldman Sachs as the lead underwriter and Kleiner Perkins' John Doerr on the board. More on this one later... P.P.S. We did not include software providers such as BroadVision (BVSN), Calico Commerce (CLIC), and Sterling Commerce (SE) in this piece as these companies only offer software to facilitate online transactions, but have not attempted to create online marketplaces