What to do? Jump on the recovery bandwagon underway as of late yesterday, or take advantage of the early spike to get out of some things you couldn't in the past few days? That's the debate investors were having early today.
TheStreet.com Internet Sector
index was down 47.56, or 4.3%, to 1047.78 in recent trading. It had traded between 1085.24 and 1124.46.
TheStreet.com New Tech 30 was down 26.25, or 3.6%, to 691.43. James Cramer takes a shot at what he expects to happen today in an earlier
piece, while the Taskmaster takes a look at how things might play out in a
column that ran last night.
Business-to-Business Competition Bad for B2B Business?
A number of business-to-business stocks got hammered after downgrades from
. Prudential downgraded
to accumulate from strong buy. Commerce One was down 34 3/8, or 19.83%, to 138 15/16; Ariba was down 34 9/16, or 15.71%, to 185 7/16 while i2 was down 30 7/8, or 23.93%, to 98 1/8. Prudential analyst Douglas Crook wrote that while he remained "enthusiastic about all three companies" and expected significant upside surprises to the current quarter, he was trimming the ratings based on a potential decline in transaction-based revenue sharing:
After speaking with two of the three companies, as well as with industry participants, our chief concern is that with the surprisingly rapid maturation and increased competitiveness of the trade exchange market, we believe there may be a deteriorating ability to demand and receive revenue sharing agreements for future transactions from anchor tenants. As a result, we anticipate compression of the stock multiples, which we believe currently discount almost limitless "frictionless" growth expected from the increasing number of planned trade exchanges.
Crook goes on to write that there has been "deterioration in the ability of the technology providers of trade exchange infrastructure software to demand the very valuable consideration of future transaction revenue streams. The key reason is barriers to entry are low and many vendors are now rushing to market with trade exchange capabilities." He then mentions
as a potential challenge to business-to-business companies, while adding that
disclosed this week that it would be entering the trade exchange market and would not be seeking future transaction revenue sharing.
Big News on Net2Phone
There was some pretty big news in the sector. An as-yet unnamed consortium led by
said it is
acquiring a 39% voting stake in
, which provides telephone service over the Internet. Under terms of the deal, the consortium will purchase four million newly issued Class A shares from Net2Phone at $75 a share, for a total of $300 million. The consortium will also purchase 14.9 million shares from
, Net2Phone's controlling shareholder, for $75 a share, or $1.1 billion.
has purchased a 5% stake in Net2Phone. Under the terms of the agreement, Net2Phone has issued and sold Yahoo! approximately 2.8 million shares of Net2Phone's common stock in exchange for approximately 806,000 shares of Yahoo! common stock, resulting in transaction valued at $150 million.
Net2Phone was up 5 9/16, or 10.0%, to 60 15/16, and Yahoo! was down 5 1/8, or 3.02%, to 164 3/8. Rumors that Net2Phone would be bought have circulated for some time, though
February prediction that
would be the acquirer did not come to pass. However,
David Faber did say this morning that a deal with AOL was close before talks broke off.
eBay Cools Down, HotJobs Heats up
was down 27 1/4, or 13.16%, to 179 7/8. According to a
Securities and Exchange Commission
filing, eBay disclosed that its bricks-and-mortar auction unit,
Butterfield & Butterfield
, received a grand jury subpoena from the
antitrust division. The subpoena "request
s documents relating to, among other things, changes in B&B's seller's commissions and buyer's premiums and discussions, agreements or understandings with other auction houses, in each case since 1992." eBay said it thinks the request may be related to the reported government probe of auction houses for price fixing.
was down 9/32, or 1.12%, to 24 7/8. The company said late yesterday that it expected to exceed revenue estimates of $9.85 million for the first quarter by at least 10%. HotJobs also reported that it had surpassed 5000 member companies to its online employment exchange, versus the 3200 member companies it had at the end of 1999. However, the company said it did not anticipate to exceed loss estimates of 44 cents for the quarter by more than a minimal amount.