VerticalNet, Microsoft deal ignites B2B stocks

Business-to-business stocks soared Friday as Microsoft Corp. (Nasdaq: MSFT) invested $100 million in VerticalNet (Nasdaq: VERT) for a 2 percent stake. The deal sent B2B stocks into the stratosphere.

VerticalNet closed up 58 1/2 to 252 1/16, or 30 percent. PurchasePro.com (Nasdaq: PPRO) jumped 19 1/4 to 113 1/2, or 20 percent, and Commerce One (Nasdaq: CMRC) gained 10 percent to 198 and Ariba (Nasdaq: ARBA) was up 3 3/4 to 185 3/4. Only FreeMarkets (Nasdaq: FMKT), which slipped 8 3/4 to 238 5/16, was left out.

Under the Microsoft deal, VerticalNet gets significant marketing and distribution for its vertical trading communities. Microsoft plans to market the site through its MSN network of Internet services; Microsoft bCentral site devoted to small businesses, and its corporate Web site http://www.microsoft.com.

VerticalNet committed to using Microsoft technologies from its Windows 2000 operating system to its electronic commerce products to support its services.

Microsoft also committed to buying "several thousand storefronts" from VerticalNet. Storefronts refer to individual sites for specialized businesses that are hosted by VerticalNet.

Also on Friday, Prudential Volpe started coverage of VerticalNet with a "strong buy" rating. Janney Montgomery Scott upgraded the stock to "buy."

VerticalNet CEO Mark Walsh told Reuters that Microsoft's storefront commitment would guarantee VerticalNet more than $200 million in revenue over three years.

VerticalNet operates 55 industry-specific Web sites including Pollution Online, Meat and Poultry Online, and Nurses.com among others.