Little-known Intraware is starting to get a healthy dose of Wall Street respect.
The company, which today announced a deal with high-flying software maker
Commerce One, has seen shares of its stock climb in recent months from the
teens to today's high of $63 a share, bringing Intraware's market worth to
about $1.6 billion. That's still a far cry from Ariba's market cap of $12.1 billion or Chemdex's worth of nearly $3 billion. But Intraware chief
executive Peter Jackson is taking the market in stride.
"We went public [last April] and went up four points, and my peers went up
60 points, and I said, 'jeez.' It's hard not to take it personally," Jackson said.
But Jackson also admits Wall Street has only recently come to understand
Intraware's business--a host of services that are more complicated than
selling software and completely different from Ariba and Chemdex's roles in
the business-to-business e-commerce space.
Intraware serves as the broker between software makers and their
customers who are trying to save time and money by testing and downloading
applications over the Internet. Intraware uses its bandwidth-heavy network
to handle huge software downloads over the Web--so IT professionals don't
have to do upgrades for far-flung users across their own networks, which often have limited bandwidth.
Companies use a password to access their Intraware site, where they can
track their various software licenses, upgrades, patches, the number of
users on a particular application and other information. Jackson
said about half of the Fortune 100 use the company's services.
Commerce One today said it will use Intraware to provide software update
and management services to its customers. The two companies plan to deliver
a co-branded service, called SubscribNet, to joint customers. SubscribNet provides customers with their own Internet account that they can use to access news and all versions of Commerce One software, which is used to buy and sell goods and services on the Web.
Analysts said the deal with Commerce One helps Intraware further shift from its
dependency on Netscape, which had been the company's biggest customer and responsible for about 90 percent of the business's revenues.
The company, which is growing 20 to 30 percent each quarter, reported $37
million in revenues last year and could report more than $70 million this year, Jackson said.
Intraware has added several other customers, including business management software maker PeopleSoft, Hewlett-Packard, Novell, Computer Associates and Vignette.
Lise Buyer, financial analyst at Credit Suisse First Boston, said
Intraware's role in business-to-business e-commerce is beginning to become
clear to investors, though the company is still undervalued.
"A high profile name like Commerce One takes the stock off the back burner," Buyer said.
Buyer called Intraware "an example of a company that's been blocking and
tackling and turning in the numbers since it went public."
Intraware also has a lot of competitors in the different areas in which it competes, many of whom are also business partners. Gartner Group, for one, provides its content to Intraware's customers but also has its own content providing service.
The key to Intraware's growth, Jackson said, will be garnering a critical mass of customers--both buyers and sellers--who will rely on Intraware's network for downloading and tracking software.
"The formula works when you've got all the right products and everyone is buying," Jackson said.
Jackson said he is optimistic about the company's future in a stock market that is often difficult to comprehend.
"I think that the markets are goofy in their own right, but at the end of the day it will all come down to the fundamentals," he said. "Are margins growing? Are revenues growing? What is the stickiness of what you do?...[It's about] whether these companies can execute. If they don't they will be executed."