I will tell them about all the silly bears who never knew how to keep up with Internet investing. Evolution kills off the slow and the weak, though.
RNWK was up strong yesterday, and check out the top Canadian B2B company IFM.TO. I bought that one at 83.
I only own CMGI among your five sector "leaders". Maybe that's why I'm up 7% YTD in 2000 and not lagging around flat like the main averages.
But I'm not as smart as all those "experts" on Wall Street and the permabear threads.
Good luck. Careful not to get run over on the information highway. Maybe I should call you an armadillo instead of a bear.
B2B values could hit $2 trillion
At Thomas Weisel conference B2Bs tell their stories
By Bambi Francisco, CBS MarketWatch
Last Update: 12:18 AM ET Jan 19, 2000 Internet Daily
Net headlines
BOSTON, Mass. (CBS.MW) -- Even the sub-zero degree temperatures outside couldn't keep the investment community from heading to icy New England to hear the latest buzz on business-to-business, arguably the sector still ablaze with optimism.
Business-to-business companies could potentially represent $1 trillion to $2 trillion in stock market value in 10 years, according to Gretchen Teagarden, the B2B e-commerce analyst at Thomas Weisel Partners, the investment firm that hosted the B2B gathering at the Four Seasons in Boston.
If that number sounds astronomical -- it's because it is. It at least matches -- is possibly double -- the current $1 trillion valuation of the Internet universe, which include Microsoft (MSFT: news, msgs) and America Online (AOL: news, msgs).
Teagarden crunched up that number by assuming that the Internet could reduce SG&A expenses by 19 percent in 10 years. So, companies that help to shave off those corporate excesses and cost inefficiencies by using the Internet in the most ingenious ways would be the biggest beneficiaries of those savings.
Of course there're different ways to save corporations money, and many different ways these Internet companies can get that corporate business. To some extent, the key for investors is to focus on the strategies applied by each firm.
Four different ways
FreeMarkets (FMKT: news, msgs) said it saved its client, United Technologies, 42 percent off the costs of buying goods. FreeMarkets is a reverse-auction site that allows companies to put out an order for direct materials, like printed circuit boards, plastic labels, and rock salt and have sellers bid on that business. FreeMarkets is offering its reverse-auction solution across different industries -- the horizontal approach. Eventually, by moving into new industries, it hopes to gain expertise in that one specific area, or vertical.
VerticalNet (VERT: news, msgs) took the building eyeballs approach, by amassing content and community sites, spanning different industries, mostly industrial. Now, the company has 54 different industrial vertical markets. "Audience matters," said Gene Godick, chief financial officer. "Consumers sites have done it right." The company essentially began as a trade magazine on the Web, and some may argue that they still are one.
But it has built upon its content-only image by going back into each community and adding expertise and products and services. By diversifying, VericalNet expects at least 40 percent of sales to come from e-commerce, by year-end. For its part, however, Godick views VerticalNet as a marketing channel as opposed to a new means for companies to reduce costs.
SciQuest (SQST: news, msgs) targets one industry -- the laboratory products and life sciences industry. It's an area which, if not ripe for cost savings, is at least ripe for time savings. "Scientists spend 4.4 hours a week pulling 10 percent of their time doing non-value added supply-chain activities," said Payton Anderson, co-founder of SciQuest.
SciQuest has amassed 8,000 suppliers and 50 buying partners. Scientists use SciQuest to buy and sell products. A barrier of entry to this space is that much of the information is pretty difficult for an average salesperson to embrace. "This is a very complex set of products, these are products that could hazardous shipment materials or need FDA requirements, these are non-commodity items," said Payton Anderson, co-founder of SciQuest.
Interestingly enough, SciQuest's closest rival Chemdex (CMDX: news, msgs) appears to be moving beyond the life sciences space and into other areas, such as health care. This gives SciQuest the ability to dominate the life sciences industry. The life sciences market is $36 billion worldwide and $12 billion in the U.S., said Anderson. One way to establish that dominance is to build out its content. The company has also locked up nine exclusive 5-year contracts with specialized suppliers that scientists need, as opposed to signing up with commodity distributors.
Commerce One (CMRC: news, msgs) offers the technology and network of buyers and suppliers that help big Fortune 500 companies, regardless of industry, create their own exchanges. Based on its market cap, which fluctuates between $13 billion and $14 billion on any given day, Wall Street has applauded Commerce One's horizontal approach, mostly for its big General Motors (GM: news, msgs) win. GM has the right to own 20 percent of the firm.
One could think of Commerce One's strategy as being the private-label or third-party or partner-branded exchange. "The GM exchange looks like the General Motors exchange powered by GM, while the BT exchange looks like BT's exchange," said Peter Pevere, Commerce One chief financial officer. In effect, Commerce One is the platform upon which each company will create their own exchanges.
While each company faces different risks, at least two risks are present for all the emerging start-ups.
One is getting corporate America to change its buying and selling ways and adopt to the Net. Another challenge is reacting quickly enough when old guard players, such as IBM, General Electric, SAP, or Oracle decide to really make their move. |
