FreeMarkets

(FMKT)

reported third-quarter earnings Monday that beat Wall Street estimates by one penny and said earnings for the full year also could come in a penny higher than previously projected.

The Pittsburgh-based electronic auctions company, which has bucked the postbubble trend that hurt other business-to-business companies, reported a third-quarter net loss of $3 million, or 7 cents a share, under generally accepted accounting principles. That compares to a net loss of $7.9 million, or 20 cents a share, in the same period a year ago.

On a pro forma basis, excluding certain items, FreeMarkets reported operational income of 4 cents a share in the fourth quarter, compared to an operational loss of 4 cents a share in the same period a year ago and 10 cents a share in the previous quarter. The company beat the consensus estimate gathered by Thomson Financial/First Call by a penny.

Third-quarter revenue was nearly flat -- up only 1.6% -- to $43.2 million from $42.5 million in the year-earlier period. Revenue declined 8.9% sequentially. Wall Street analysts were expecting third-quarter revenue of $42.7 million.

The company's guidance for the third-quarter targeted revenue ranging from $42 million to $44 million and earnings from 2 cents to 4 cents a share.

FreeMarkets modified its guidance for the full year, forecasting revenue would range from $181 million to $182 million, vs. prior guidance in July forecasting revenue between $180 million and $184 million. The company said operational earnings are projected to range from 25 cents to 26 cents a share, vs. a prior target of 25 cents a share.

For the full year 2002, analyst estimates projected earnings of 26 cents a share on $181.4 million in revenue.

FreeMarkets said it expects fourth-quarter revenue to range from $45 million to $46 million -- slightly above the Wall Street estimate of $44.5 million. Fourth-quarter operational earnings are targeted between 4 cents and 5 cents a share -- largely in line with Wall Street expectations of 5 cents a share for the fourth quarter.

With revenue up modestly this year compared to last year, FreeMarkets has managed to avoid some of the pain of battered business-to-business software companies such as

Commerce One

(CMRC)

. That's partially because it offers more services in addition to just auction software, letting customers outsource electronic auctions and procurement to FreeMarkets.

Shares of FreeMarkets fell 63 cents, or 8%, to close Monday at $7.25. In after-hours trading, shares rose 4%.