E-Mailbag Monday: IPO of the Week, Yahoo! & eBay, B2B Supply Exchanges

What’s the IPO for the week?

Reply: One of the hottest sectors for IPOs has been infrastructure.
While the Web is getting faster, there is still much work to be done. One
company providing solutions is ArrowPoint Communications.

The company does
“content switching.” In other words, it helps companies improve the speed,
reliability and security of Web sites. The solution involves hardware
switches and sophisticated software. To gear-up for the Christmas season,
Toysmart.com ordered two ArrowPoint Switches. The performance of the site
was doubled — without using extra servers.

ArrowPoint has over 100 customers. Examples include Ragingbull.com, Exodus
and NaviSite. Revenues were $200,000 in 1998 and zoomed to $12.3 million in

The lead underwriter is Goldman Sachs and the price range is $15-17. The
proposed ticker symbol is ARPT.

Yahoo! & eBay: A Marriage Made in Cyber Heaven?

What do you think of the possibility of a merger between Yahoo! and eBay?

Reply: Rumors have been swirling for some time. And this makes
sense. Yahoo!, despite its incredible user base, is having problems
penetrating the person-to-person auction market. Yet, this is a tremendous
market, which should grow for many years.

However, as with any deal, the question is really about price. eBay
currently has a market capitalization of $31 billion. In order for Yahoo!
to purchase eBay, there will need to be a premium, probably at least 30 percent.
True, Yahoo! has a hefty market capitalization — $102 billion — the fact
remains that the price tag would be enormous. It is likely that the market
would penalize the stock of Yahoo!

Then again, the portal market is extremely competitive. The AOL-Time
Warner merger is definitely a major threat to Yahoo! A merger between
Yahoo! and eBay would likely be a way to fight off AOL. It would be an
online advertising and e-commerce powerhouse.

New Buzz Word

What are B2B supply exchanges?

Reply: Of course, the B2B market has been red hot. B2B allows
companies to transact with each other — creating revenue opportunities, as
well as lower costs.

To take advantage of the opportunities, traditional companies are creating
alliances with competitors to create B2B supply exchanges. One recent
exchange was between Oracle, Chevron and Wal-Mart. The goal is to
consolidate the convenience store industry. It is called the
RetailersMarketXchange.com. The supply market for the convenience industry
is about $200 billion per year.

In fact, Oracle has been aggressive in using its technology as the basis of
these exchanges, by not only getting development fees but also ownership in
the exchanges. For example, Oracle is also part of a retail store supply
exchange and an auto supply exchange, which involves GM, Ford

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