There’s little doubt that the business-to-business e-commerce sector is
now the hottest Internet space among investors. Not only have most of
the IPO moonshots of the past six months carried some kind of B2B
payload, but some of the highest-flying stocks on the ticker have
belonged to sector stars such as Commerce One (CMRC)
and Ariba (ARBA).
Yet it’s equally clear that business-to-consumer, or B2C, is a
multibillion-dollar market holding vast revenue potential for any number
of e-commerce players.
One of several Massachusetts companies expected to go public this week
has its sights set on both markets. FirePond, based in Waltham, is
offering 5 million shares between $11 and $15 each. Lead underwriter is
Robertson, Stephens & Co., while the stock will trade under the Nasdaq
ticker FIRE.
FirePond sells integrated e-commerce sales and marketing software for
companies running either B2B or B2C Web-based channels offering
personalized products and services. It targets Global 2000 firms; among
its customers are Sprint, Renault, ADP and Empire Blue Cross Blue
Shield. Sales in fiscal year 1999, ended Oct. 31, were $34.3 million,
while net loss was $28.9 million.
FirePond is no startup. The company was founded in 1983 and sold
customized interactive electronic sales tools. It changed strategy in
1996, however, opting instead to develop and sell packaged software.
Which is why FirePond’s revenue is slightly misleading. Nearly half of
fiscal 1999’s revenue (46%) came from custom development contracts,
instead of the company’s new core business. If you look at it the other
way, however, that’s a plus, for the numbers show that annual revenue
from e-commerce software sales nearly tripled, going from $6.9 million
in 1998 to $18.4 million last year. This is exactly the kind of growth
that investors want to see in Internet companies.
Still, FirePond faces strong competition in several overlapping markets
from companies such as Calico Commerce (CLIC),
Trilogy Software, BroadVision (BVSN),
Oracle and numerous others. Indeed, it’s almost surprising FirePond
isn’t trying to raise more than $60 million in the offering, for staying
in the thick of the e-commerce software race isn’t cheap.
Don’t let the IPO rocket blasts fool you; for all the excitement and
spectacle, there ultimately will be many losers in the B2B and B2C
e-commerce spaces. While FirePond has a chance to be a winner, it’s
simply too early in the race to make a call. Nonetheless, expect a
strong ticker debut.
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