There was a time when Internet businesses were so diverse that they gave birth to a slew of shorthand monikers for those that sold things over the Internet. The insider-sounding monikers quickly went mainstream, as people hawked B2C, B2B and B2G stocks.
You remember, don't you?
It's understandable if you'd rather forget business-to-consumer, business-to-business and the business-to-government nicknames. Most of these companies saw their stock prices reduced to a sliver of their once-glorious valuations.
analyst Patrick Walravens downgraded three B2B companies after talking to top executives at many major corporations.
were all lowered to market perform from buy, joining
Internet Capital Group
, which also have the same rating.
was cut to buy from strong buy and was called a top choice in the sector.
The entire sector took a rather nasty beating as a result.
* -- Hit a 52-week-low
He also dropped earnings estimates, cutting Ariba's 2001 forecast to 22 cents from 26 cents. Commerce One's 2001 target was clipped to breakeven from a 1-cent profit, while FreeMarkets was left alone. Despite a 2001 earnings estimate revision to 56 cents from 60 cents, PurchasePro shone like a diamond against the blackness of the rest of the sector.
"We remain bullish on PurchasePro for the near-term and leave our first-quarter and second-quarter estimates unchanged," he wrote. "However, we think it is unrealistic to expect that any software company could escape a sustained downturn in the economy and in technology spending."
After talking to many major corporations, Walravens said he found three distinct mindsets emerging from the people who allocate money for B2B projects. The first, he dubbed the "
Wall Street Journal
" effect. Company officials read about the weakening economy in the newspaper and get skittish about spending money. "One COO we spoke with told us that his instinct was to delay any deal north of $1 million," he wrote.
The second, called the "super return-on-investment" effect, maintains officials don't think they'll make enough cash in the near term from an investment to warrant an outlay. "They are perfectly content to wait another month or two," Walravens said, "while estimated cost savings are validated, specific performance metrics are identified and vendor references are checked."
But the last mindset in the executive office drove home one of the pivotal problems facing these companies -- executives do not feel it is critical to spend on B2B projects. "The wheels will not fall off the business because it spends too much money processing purchase orders for office supplies," he wrote.