Market for B2B Apps Still Soft

Sales of B2B software, the applications needed to establish online
marketplaces, bolster supply chains and allow for collaboration among
companies, continue to be soft, and Goldman, Sachs analysts are lowering
estimates for some of the prime players in the field.

“While we didn’t really expect to see much strength (in B2B software sales)
given the economy and seasonality, business was somewhat weaker than
expected,” GS said in an advisory to clients. “Therefore we are once again
taking the pre-emptive action of cutting estimates on Ariba, Commerce One and
i2 Technologies.”

“…we expected results to be flat to slightly down in September with a slight
uptick in December (7-10 percent),” GS said. “However, we now believe that
September could be down from June by as much as 10-15 percent and in some
cases by as much as 30 percent as companies have depleted both backlog and
deferred revenues.”

GS blamed the B2B softening on the continued economic slowdown, especially in
the manufacturing and financial services sectors, coupled by weakness in
Europe due to slower spending and the summer holiday season there.

For Ariba , GS reduced September quarter results slightly
to a loss of 12 cents a share, from a previous estimated loss of 10 cents a
share.

For Commerce One , GS said it believes the company “has
strong potential to miss numbers” and lowered estimates to a loss of 24 cents
a share from its previous estimated loss of 22 cents.

For i2 , Goldman, Sachs said it now expects a loss of 12
cents a share, compared to a previous estimated loss of 11 cents a share.

On the bright side, analysts said there have been “some pockets of strength
in application software” generally coming from the larger ERP companies, such
as PeopleSoft and SAP. “Both are gaining mindshare and marketshare with
customers and systems integrators as companies look to build out internal
applications,” GS said.

But that was followed by this statement: “It appears business (in general)
has not yet bottomed and Street estimates for software and tech in general
are likely still too optimistic.”

Goldman, Sachs actually seems more pessimistic than the Federal Reserve. A new
report from the Federal Reserve Bank in Dallas
said last week that
despite the meltdown in the dot com world and the ongoing shakeout involving
many e-marketplaces, B2B e-commerce is fundamentally sound and continues to
drive so-called new economy.

But clearly when it comes to B2B estimates, mileage varies considerably,

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