Clarus, which makes business-to-business software for small- and medium-sized businesses, watched its stock fall $6.38, or 21%, to $24 after one analyst questioned how the
Tuesday announcement of Commerce One's partnership with Microsoft would affect the company.
You see, while Microsoft's announcement that it would collaborate with Commerce One on B2B initiatives made a big slash, and helped drive Commerce One's stock higher, it seems that Microsoft already had a B2B partner: Clarus.
Since October, Clarus has enjoyed referrals from Microsoft because its software is designed to run smoothly on Microsoft's
platforms. That's especially important in Clarus' core market because most small- and medium-sized businesses use Microsoft.
"Microsoft's move to embrace Commerce One tempers some of the upside revenue opportunities we had anticipated Clarus would gain by virtue of its stature as Microsoft's B2B e-commerce platform of choice," wrote David Garrity, an analyst at
Dresdner Kleinwort Benson
who rates Clarus a buy. (His firm hasn't done underwriting for the company.)
Garrity lowered his revenue estimates for Clarus to $50 million this year from $51.3 million and for next year to $110 million from $125.2 million. In addition, he cut his target price for the stock to $55 a share from $95.
He noted, however, that the Microsoft-Commerce One deal isn't exclusive, which means Clarus isn't completely out of the picture.
Clarus, meanwhile, sees no problem. "We expect to have the same strong support from Microsoft that we've had in the past," said Nancy O'Donnell, Clarus' director of investor relations. "We don't really compete head-to-head with Commerce One. They target these mega-exchanges, and Clarus' target market is the midsized enterprise."
The development comes at a particularly bad time for Clarus. Once lauded as the No. 3 player in the B2B software market behind
and Commerce One, its shares already have sold off dramatically in recent weeks. Investors were worried that the company might miss its third-quarter estimates, according to analysts' reports. The company is expected to post a loss of 35 cents in the quarter, according to
"The guidance from Clarus has not changed," O'Donnell said. "Since we're in our quiet period before earnings, I can't comment on that directly, but there has been nothing from the company to suggest that would be the case."