CNET también está disponible en español.

Ir a español

Don't show this again

HolidayBuyer's Guide
Tech Industry

Harbinger stakes future on Net

The vendor of business-to-business e-commerce technology is moving toward the Internet protocol.

Electronic data interchange [EDI] vendor Harbinger is making a Net-centric strategy the key to its turnaround, announcing an e-commerce portal for business-to-business transactions.

Harbinger will quickly move toward using Internet protocol [IP] for its online offerings instead of traditional EDI, which involves using forms to send transactions directly between computers without human intervention. Historically, most EDI transactions are between a major company and its suppliers, moving on secure networks called VANs, or value-added networks.

The company projects that more than half its network traffic will move to IP by year's end, using new communications software called Pipeline that works from the harbinger.net Web site.

But Wall Street analysts think it'll take more than a vision to lure investors back to Harbinger's stock, which was slammed in mid-1998 when the company's results fell short of Wall Street expectations.

"They laid out a long-term business strategy, and it's not something that's going to click tomorrow, so many people will wait and see how the company unfolds," said Arthur Newman, equity analyst at Gerard Klauer Mattison, who has a "hold" rating on the stock.

Ullas Naik of First Albany, who's also neutral on the stock, voiced the same sentiments: "We applaud their move to transition to IP, but now it's a 'Show me' story. I would rather see couple of quarters of steady, predictable performance. But they're making all the right moves."

In fact, Naik rates Harbinger ahead of EDI competitors Sterling Commerce, GE Information Systems, and IBM in responding to the challenge the Internet represents to their business model. The central problem: Internet connections are cheaper than using VANs.

"We believe businesses will trade with each other electronically, and we believe most business will be IP-based," Harbinger CEO C. Tycho Howle said today. "We are willing, in the long-term interest, to invest back about 25 percent of our profitability into developing and building awareness for harbinger.net."

That will amount to about $7 million in 1999, the company said, telling analysts it expects to earn about 30 cents a share this year, down from 40 cents that many analysts had projected. The company expects 1999 revenues to grow 25 to 30 percent, with a goal to exceed its competitors' growth rates.

In other Net-centric moves, Harbinger also plans to set up a research and development division, Harbinger Labs, to focus on e-commerce technologies, not just enhancing existing products. It also pledged to have more customers using IP connections than any competitor.

Harbinger.net is designed to allow IP transactions handled on VANs to move to the Internet. Harbinger's announcement came during a morning teleconference with Wall Street analysts and the press, and it also outlined its plans in a letter to shareholders.

In October, the company laid off 110 employees, 10 percent of its work force, sending its stock down to 4.50, still its 52-week low. The stock has traded under 10 since August, and barely moved today despite Harbinger's announcement, trading around 8.

Today the company also reiterated its support for emerging Internet e-commerce protocols, including XML (eXtensible Markup Language) and Online Buying on the Internet (OBI).