B2B companies up on strong Q3

Nicole Volpe

NEW YORK: Shares of business-to-business software and services companies rose

on Wednesday, with early indications of a strong third quarter for the sector

and recent regulatory clearance for various giant electronic marketplaces.

"Both foreign and domestic regulatory bodies have started to give

clearance to large mega-exchanges, providing a positive catalyst for the entire

B2B sector," said Dresdner Kleinwort Benson analyst David Garrity.

Earlier in the month, the European Commission cleared Myaircraft.com, an

exchange for aerospace parts, and the Federal Trade Commission cleared the

Trade-Ranger energy and petrochemical exchange.

Garrity said in an interview on Wednesday that Federal Trade Commission

approval was expected for Covisint, an auto exchange set up by the Big Three

automakers–General Motors Corp., Ford Motor Co. and DaimlerChrysler AG.

A Federal Trade Commission spokesman declined to comment. There was no other

evidence to support the rumored approval.

"The Covisint approval is only in the rumor stage right now," said

ABN AMRO analyst Robert Johnson. "But people know if it does come, you can

expect a substantial upmove by Commerce One."

Commerce One is one of the original partners in the formation of the exchange

and would provide much of the technology involved.

"Commerce One shares have been under a bit of a cloud, while other B2Bs

that are less e-marketplace dependent have done better," he added. "So

once this logjam is broken it's likely to move the stock up substantially."

While Garrity called the Covisint decision a bellwether for the sector,

officials and the Justice Department and the Federal Trade Commission have said

at seminars for antitrust lawyers that there is no simple rule for B2B deals,

any more than there is for other joint ventures or mergers.

Shares of Commerce One were up $7-1/4 to $59-5/8, making it one of the top

net gainers on the Nasdaq.

PurchasePro.com Inc. shares jumped as well, on expectations of a strong third

quarter, boosted by a relationship with America Online Inc., which was launched

on August 16.

"Early returns (from the AOL relationship) thus far have been positive,

with over 800 customers already signed up," said Garrity.

PurchasePro shares rose 8-3/4 to 59-1/2.

Other business-to-business companies rose as well. i2 Technologies Inc.

shares rose 7-5/8 to 165-1/4, and FreeMarkets Inc. rose 6-7/16 to 80-9/16.

"I don't think anyone is seeing any slowing whatsoever in this

sector," said Johnson. "We've expected summer doldrums and we haven't

even seen those."

(C) Reuters Limited 2000.