Even in an emerging sector like business-to-business e-commerce, there already are clear winners and losers.

VerticalNet

(VERT)

isn't one of them.

The Horsham, Pa.-based company, which runs communities on the Internet for industry professionals, has caused more than its share of controversy lately. Some analysts have been pounding the table for the stock. Others have been questioning whether VerticalNet really is a B2B e-commerce play.

The stock has pitched wildly in the draft of all this. Last week, a

lukewarm write-up from

Merrill Lynch

pushed the stock down 14% in one day. Then, notes from

Prudential

,

Lehman Brothers

,

W.R. Hambrecht

and

Credit Suisse First Boston

hoisted the stock 23% over the next two sessions.

Questions Weighing on VerticalNet
The company's stock has sagged as investors wonder whether it's a true B2B.

Now, with the third quarter complete and earnings season just ahead, investors may push the stock more forcefully in one direction or another. It's already down 42% since Aug. 30. If the company blows away analysts' estimates and shows good growth in its online initiatives, get ready for a moon shot. If it only meets or barely beats expectations and shows further erosion in its online initiative, look for more trouble.

Rough Days

VerticalNet has had a rough go of things lately. After building some momentum with its second-quarter results, investors started digging a little deeper, and they didn't like what they found: The company derived 54% of its revenue from its

NECX

unit, which is mainly an offline brokerage house for computer chips and components. It's that reliance on an offline business that led several analysts to question whether VerticalNet deserves a B2B valuation.

After that,

rumors started flying that VerticalNet would buy

Ventro

(VNTR) - Get Report

, the beleaguered operator of Internet marketplaces. After several days of seeing its stock plummet because of that talk, VerticalNet took the extraordinary step of issuing a

press release disavowing those rumors.

Then last week, Frank Gristina, an analyst at

Robinson-Humphrey

, downgraded VerticalNet to outperform from buy. (His firm hasn't done underwriting for the company.)

What's Behind Those Storefronts?

Gristina surveyed VerticalNet's storefront customers, or companies that sign up for their own Web sites where they can list products on VerticalNet's network.

Most of those customers are coming in through a deal with

Microsoft

(MSFT) - Get Report

, under which the software giant subsidizes their fees. (Microsoft also invested $100 million in VerticalNet.) Over three years, VerticalNet has said it expects to open 80,000 storefronts and generate $200 million in revenue through that deal. But each new customer only gets subsidized by Microsoft for one year, and Gristina's survey found 77% of them were undecided on whether they would renew their contracts.

Gristina said that most storefronts are relatively new, so the companies behind them are early in the decision process; but his survey also found that 56% of respondents joined VerticalNet because it was free. In that group, 83% said they were undecided about renewing.

VerticalNet wasn't able to make an executive available to address the concerns raised in this story.

Still More

Other analysts say the problem is worse.

"The problem with the company is that it's highly touted, and every time I dig a little deeper, I find something disturbing," says George Santana, an analyst with

Wedbush Morgan Securities

, who's been critical of the company. "Every stone I turn over, I scratch my head and say what's going on here." (He rates the stock a hold, and his firm hasn't done underwriting for the company.)

Santana took a look at the company's e-commerce centers, sites on the VerticalNet network where companies actually conduct business.

"We went and hand-counted the e-commerce centers at Sept. 26, and VerticalNet had 206 of them, up from 105 at the end of last quarter," says Santana, the Wedbush analyst. "So that's pretty good. But then if you look at those 206 commerce centers, there are really only 97 companies behind them, so you have quite a lot of duplication there."

In one case, a whole lot of duplication. After the quarter ended last week, Santana counted again, and said VerticalNet's second-largest e-commerce center customer was

CertiSource

, with 20 e-commerce centers. Problem there is that VerticalNet acquired CertiSource last year.

"This is a company that VerticalNet owns, and it's the second-largest buyer of these e-commerce sites. VerticalNet is putting money into

CertiSource and then round-tripping it back," Santana said. "That's a concern."

Still, those concerns didn't stop other firms from crowing about the stock last week: In fact, they may have led to it. Underwriters Lehman Brothers and Prudential came out with notes supporting the company in the wake of Gristina's survey.

"I thought the survey was excellent," says Patrick Walravens, an analyst at Lehman, who reiterated his buy rating on the stock the same day Gristina's survey came out. "I loved the methodology, but they should have waited six months before they did it," so companies had enough time to make up their minds about VerticalNet.

Investors, meanwhile, are waiting for Oct. 24, the day VerticalNet is scheduled to release its third-quarter results. Then they might finally be able to decide which way the wind blows on VerticalNet.