FreeMarkets Bucks B2B Correction - TheStreet

Updated from 9:46 a.m. EST

While most business-to-business companies struggled last quarter amid a weak economy and a sharp slowdown in technology spending,

FreeMarkets

(FMKT)

actually posted a gain in revenue and earnings, and raised its guidance for 2002.

Commerce One

(CMRC)

,

Vignette

(VIGN)

and

Ariba

(ARBA)

all saw their quarterly revenue decline roughly 60% from last year and have disappointed investors by missing earnings estimates or issuing cautious outlooks going forward.

But FreeMarkets, which provides e-sourcing software, posted a 38% increase in fourth-quarter revenue, reaching $47.6 million, compared with $34.5 million in the same quarter last year. That topped analysts' estimates of $45.09 million.

In addition, the company said it earned $3.9 million, or 9 cents a share, in its latest quarter, compared with a loss of $10.4 million, or 27 cents a share, in the same period last year. Thomson Financial/First Call had been looking for a 6-cent profit.

On Nov. 29, FreeMarkets boosted revenue and earnings estimates, citing the renewal of several long-term contracts.

"Despite challenging economic times, we continued to grow our business and achieve solid financial results," said Chairman and CEO Glen Meakem in a statement Tuesday. "We will continue to build momentum and market share in the months ahead."

FreeMarkets also reaffirmed its full-year 2002 guidance estimates and increased its full-year earnings guidance to between 20 cents and 25 cents a share. Analysts had been looking for a profit of 22 cents a share.

The B2B company rose 25% last year after losing 94% of its value in 2000. The stock ended Tuesday's session down 6% at 18.30.

Other Hand

The results from Commerce One couldn't have been more different. The firm posted a pro forma loss of 23 cents a share in its fourth quarter, much wider than analysts' estimated 16-cent loss and last year's 7-cent gain.

Revenue was also weaker than expected, totaling $56 million, compared with $191.4 million last year and a consensus analyst estimate of $63.69. Commerce One, which lost 85% of its value last year and 74% the year before, traded down 4% to $2.60 Tuesday.

Vignette also recorded disappointing results after the bell. The B2B outfit posted revenue of $52.5 million in its latest quarter compared with $123.91 million last year and analysts' estimates of $55.9 million.

Core losses came in at $13.7 million, or 4 cents a share, which was at the low end of its previous forecast, given in November. Vignette previously said it expected to report a core operating loss in the range of $13 million to $16 million, with the net loss ranging from 4 cents to 6 cents a share, excluding charges. The stock rose 0.87% to 4.65 on Tuesday.

"While the quarterly results are disappointing, we have taken immediate action that will improve our future performance," said CEO Greg Peters. "I am confident that in 2002 we can build on our market leadership position and on the market share gains which we experienced in 2001."

Deepening

Earlier, Ariba posted a pro forma loss of $6.9 million, or 3 cents a share, in its fiscal first quarter compared with a profit of $14 million, or 5 cents a share, last year. Analysts had expected the company to lose 5 cents a share.

Revenue fell 67% from last year, reaching just $55.3 million compared with $170.2 million in 2000. Still, the firm managed to beat analysts' estimates of $52.7 million.

Although the company said it expects to report a narrower-than-expected loss in its second quarter and expects to break even in its third quarter, Ariba also said it sees no revenue growth until economic conditions improve. That news sent its shares down almost 13% to $5.93 in Tuesday's session.