Among many others, Commerce One (CMRC) announced its financials. Despite the
fact that it is a leader in the business-to-business space (b2b), the
company still underperformed expectations.
Troubling investors was the net loss of $28.8 million (40 cents a share),
which compares to $7.6 million in the same period a year ago. This was worse
than expected. In fact, several analysts doubled their loss estimates.
So it was not surprising that the stock plunged 14-7/8 to 185. But looking
deeper at Commerce One, the recent drop looks like an opportunity. The maker
of b2b software solutions posted sales of $16.9 million in the past quarter,
up from a lowly $1 million in the same period a year ago. But, the consensus
of analysts was to hit $13.4 million.
Moreover, the company had $9 million in cash flows for the prior quarter.
Also, the company announced that Commerce One should break-even in the
middle of 2001.
Actually, emerging companies tend to be erratic. They need to be
opportunities and run fast. For example, Commerce One has been aggressive on
the mergers and acquisitions trail, purchasing CommerceBid and VEO Systems.
Such acquisitions did not help the financials in the short-term.
But the key is that Commerce One is staking its claim on becoming an
integral component of the b2b infrastructure. The company has been furiously
signing major companies to use its software, such as General Motors, Grupo
Financiero Banamex-Accival and Royal Dutch.
Yes, the b2b space is highly competitive, with Ariba and even Oracle and
perhaps SAP pressing hard. But I think the most important thing to consider
is that – in spite of not meeting expectations – the company did not get
massacred. This shows that there is lots of investor confidence in the
company, as well as the b2b space. Off substantially from its high, Commerce
One looks particularly attractive.
