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E-commerce firms reverse early gains

Shares in companies that handle transactions between businesses fall back after a week-long run.

Shares in companies that handle transactions between businesses jumped in early trading today but later reversed course.

In afternoon trading, shares in Walnut Creek, Calif.-based Commerce One were up more than 55 to 311.75, a gain of more than 20 percent. But when the market closed, the shares had plunged, closing at 250, down 6.44.

Shares in Commerce One, which makes business-to-business software that allows companies to buy and sell goods online, climbed yesterday as high as 271 on heavy volume of 8.3 million shares. Also yesterday, the company completed a 3-for-1 stock split.

Commerce One's run had spilled over to rival Mountain View, Calif.-based Ariba, whose shares rose nearly 12 percent in afternoon trading, setting a new all-time high. Ariba's board also recently set a 2-for-1 stock split.

But also like Commerce One, Ariba's shares retreated to close at 183, gaining just 0.25 point.

The stall in the rally follows an active month for business-to-business companies, which have stepped into the spotlight with announcements of partnerships and new deals.

Earlier this month, Ariba acquired privately held Tradex, a software developer that matches large numbers of buyers and sellers online, in a stock deal worth $1.86 billion. With the acquisition, Ariba said it will expand its offerings for building Net markets or trading exchanges.

Recently, several companies have jumped into the business-to-business market, including Oracle and SAP. One reason: Forrester Research expects the business-to-business industry to expand to $1.52 trillion in 2003 from about $131 billion this year.

In early November, Oracle announced an online venture with auto giant Ford. The two companies said they are forming a venture called AutoXchange that will connect the car maker to its global materials and parts suppliers via the Net. The online marketplace is meant to help Ford streamline $80 billion in purchases from more than 30,000 suppliers.

On the same day Oracle partnered with Ford, Commerce One inked a deal with General Motors to create a similar site. Under the deal, GM said it will use Commerce One products to create GM MarketSite, a "virtual marketplace" for products, raw materials, parts and services.

A few weeks ago, German software giant SAP launched plans for an online health marketplace with partner Neoforma.com.

SAP also plans to start a marketplace for material repairs and supplies for the chemical and pharmaceutical industries. SAP said chemical giant BASF will join the marketplace as a buyer, along with healthcare equipment seller Siemens.