Business-to-business e-commerce companies saw their shares tumble Friday following a weak performance by one of the smaller players in the sector.
Leading the rout was
, the business-to-business online marketplace operator whose shares plunged 30% Friday morning after analysts downgraded the stock, citing disappointing second-quarter transaction growth.
Of the 10 firms that follow the stock, six --
Deutsche Banc Alex. Brown
Credit Suisse First Boston
First Union Securities
-- cut their ratings. (Of those firms, Prudential and Robertson Stephens have been Ventro underwriters.) Ventro shares slid 6 3/16 to 14 3/16 by late morning, and shares in Ventro's larger competitors also fell, by 4% to 8%, as the tech-crazed
index pulled back from Thursday's rally.
Not Enough Transactions
Analysts are concerned because Ventro's revenue from transaction fees fell some 30% short of estimates, totaling $1.2 million. Overall, the company reported $1.8 million in net revenue, but that number was bolstered by $600,000 in services revenue that analysts hadn't expected to see.
The company told
Thursday night that the slow integration of B2B technology at big corporations was hindering the ramp-up of transactions over its exchanges. That caused a lower-than-expected total transaction volume of $29.1 million in the quarter. Analysts were hoping for around $35 million.
David Perry, Ventro's president and chief executive, told
that investors shouldn't overlook the good news in the most recent quarter's results. "We're finding more and more ways to make money," Perry said Thursday night.
All the same, Ventro's results look particularly bad in the context of the strong numbers other B2B companies reported. Larger competitors such as
( CMRC) and
all beat analysts' revenue expectations by wide margins.
Ventro posted a 74 cent-a-share loss Thursday, beating analysts' expectations by 6 cents. But among fast-growing, money-losing B2B companies, the emphasis is on revenue, not earnings.
The company went public a year ago at $15 share as
, but changed its name to Ventro earlier this year when it decided to branch out from its core life sciences electronic marketplace. Since then, it has also focused on the medical industry, through its
site, and on fluid processing materials, through its
marketplace. But that expansion hasn't helped grow transactions quickly, and 97% of Ventro's business is still going through the Chemdex site.
Its shares, now in the midteens, traded as high as 243 1/2 at the height of the B2B frenzy earlier this year.