Commerce One (Nasdaq: CMRC) rallied Monday, and then reversed course on mixed analyst coverage for it and fellow B2B player Ariba (Nasdaq: ARBA). News that Commerce One inked a deal in Korea drove earlier gains.
Commerce One shares were off 1.88 to 37.38. The company tried to put investors at ease in last week by reiterating expectations. Ariba (Nasdaq: ARBA) was down 6.56 to 71.88.
WitSoundview analyst David Mahoney was the big reason for the worries. He downgraded both Ariba and Commerce One from "buy" to "hold."
"In their heyday both companies were valued as if they will provide the applications and infrastructure to power virtually all B2B commerce transactions and garner recurring revenue streams on those transactions," Mahoney stated in a research note.
Now, though their stocks have dropped off 43 percent and 44 percent since November 6, respectively, the stocks are still overvalued based on the "limited opportunity for simple procurement and marketplace applications." Mahoney also lowering his price targets: Ariba's is now $52 and Commerce One's is $39.
The gist of Maloney's research rests on increasing competition for Ariba and Commerce One.
Bear Stearns issued a more positive report on the companies.
"At current valuations, e-procurement enablers offer "growth at a realistic price" to the average investor," analyst Kaushik Shridharani wrote in a report. He said that e-procurement enablers have a risk/opportunity profile different to that of other technology stocks, and their focus on cost savings makes them an attractive play on concerns about a slowdown in the economy.
The sharp declines over the past month are "not justified by fundamentals," Shridharani added, though he said there was some justifiable concern over "dot-com exposure" through sales and some sharing of revenue and equity.
Bear Stearns reiterated its Aug 2001 price targets for Ariba and Commerce One as well as Clarus Corp (Nasdaq: CLRS) which are, respectively $180, $75, and $130 per share.
In other news, Commerce One announced it is powering GTWeb Korea, a new e-marketplace in Korea which will offer businesses real-time buying and selling capabilities, helping buyers access a vast network of suppliers and lower purchasing costs.
The company called its deal with GTWeb a major milestone in its effort to move business trade online throughout Asia. The deal is a joint venture between Commerce One and some of the largest conglomerates in Korea such as: LG Electronics; car manufacturer Hyundai; information and telecommunications giant Dacom; Kumho Group, a conglomerate focusing in tires, petrochemicals, transportation, aviation and construction; and Samyang Corp., which specializes in polyester, food, livestock feed, chemicals and environmental engineering.