Updated from April 29

Electronic auctioneer

FreeMarkets

(FMKT)

was trading higher the day after it reported earnings results that handily beat Wall Street estimates.

Goldman Sachs also raised its rating on the Pittsburgh company, which also reported higher-than-expected revenue, to outperform from market perform. In recent trading FreeMarkets was up $1.03, or 5.3%, to $20.53.

FreeMarkets, which raised 2002 earnings guidance earlier this year, said that second-quarter earnings will match analyst estimates on revenue that is just shy of Street expectations. The company raised full-year earnings guidance and maintained previous full-year revenue estimates.

FreeMarkets, which provides e-sourcing software, said it lost $11.5 million, or 28 cents a share, on $46 million in revenue. That compares with a net loss of $43.7 million, or $1.13 a share, on $34.7 million in revenue a year earlier.

Excluding certain items, FreeMarkets said it earned 7 cents a share, compared with a pro forma loss of 24 cents a share in the same period a year earlier.

Analysts were expecting the company to report pro forma earnings of 3 cents a share on $44.2 million in revenue, according to Multex.com

Revenue rose 2.7% sequentially.

For the second quarter, the company said it expects revenue to increase to $47 million and pro forma earnings to range from 5 cents to 7 cents a share.

Analysts were expecting FreeMarkets to earn 5 cents a share on $50.1 million in revenue in the second quarter, according to Multex.com.

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The company reaffirmed full-year 2002 revenue guidance of $205 million and increased its pro forma earnings guidance to 25 cents a share. That's at the high end of previous guidance given in January, when the company said earnings would range between 20 cents and 25 cents a share.

Analysts were projecting the company would earn 25 cents a share on $211.1 million in revenue in 2002, according to Multex.com.

While other business-to-business software makers' shares such as

Ariba

(ARBA)

and

Commerce One

(CMRC)

have sunk below $5 with the bursting of the dot-com bubble, FreeMarket shares have maintained solid footing in the double-digit range as big companies continue to use the company's electronic-sourcing auctions.

"These guys

FreeMarkets are basically doing it

the auctions for the customers," said Tim Klein, an analyst with U.S. Bancorp Piper Jaffray, who has an outperform rating on FreeMarkets. "They operate more as a service company. It's a much more steady, predictable model." By contrast, Ariba and Commerce One sell their software to other companies under a more traditional software licensing model, with less predictable revenue, said Klein, whose firm hasn't done any banking with FreeMarkets.

Before announcing results, FreeMarkets' shares ended down 83 cents, or 4.1%, at $19.65 in regular trading. In the extended session, shares rose to $20.50.