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Freemarkets boosts earnings forecast

The operator of online business marketplaces tops analyst estimates in the fourth quarter and raises financial goals for the current quarter.

Freemarkets on Monday topped analyst estimates in the fourth quarter and boosted financial goals for the current quarter.

The operator of online business marketplaces reported a fourth quarter loss, excluding special charges, of $10.4 million, or 27 cents per share, on revenue of $34.5 million. A consensus of analysts had predicted a loss of 31 cents per share on revenue of $31.2 million, according to First Call.

Freemarkets now expects a first quarter loss of about 25 cents per share, Chief Financial Officer Joan Hooper said during a conference call. Analysts had been predicting a loss of 29 cents per share in the current quarter, according to First Call.

Revenue in the first quarter should be about $36 million, higher than analyst forecasts of $34 million, Hooper added.

The company still expects to break even in the first quarter of 2002.

Freemarkets closed up $1.56 to $26.69 Monday. Shares of the company fell in after-hours trading to $25.81, according to Island ECN.

Fourth quarter revenue increased 340 percent year-over-year and 30 percent from the third quarter. Volume on the company's marketplaces rose 18 percent from the third quarter to $3.5 billion, with 2,432 auctions conducted.

"Overall, I thought the fourth quarter was good," said Michael Hughes, an analyst with Raymond James.

As with other business-to-business commerce specialists that recently reported results, Freemarkets issued a growth forecast that wasn't quite as bullish as in previous quarters. But the company remains in solid shape, analysts said.

"The fundamentals of their business are clearly very strong," said Scott Alaniz, an analyst with Stephens. "I think the stock has less downside risk over the next year, and analysts and portfolio managers are going to take that into consideration."

Including one-time acquisition charges and costs related to stock compensation, Freemarkets in the fourth quarter lost $44.6 million, or $1.17 per share.

For the full year, Freemarkets lost $43.9 million, or $1.18 per share, excluding one-time costs. Including all items, Freemarkets in 2000 lost $156.4 million, or $4.21 per share, on revenue of $91.3 million.