Shares of Internet marketplace firm FreeMarkets (Nasdaq: FMKT) rose nearly 30 percent in early trading Thursday after the company, a pioneer in online reverse auctions, said that fourth-quarter business is proving stronger than expected and that results will be better than previously thought.
FreeMarkets also announced an expanded contract with one of its customers.
The news led analysts at Wedbush Morgan and Adams Harkness to repeat recommendations on FreeMarkets shares, according to published reports. The sharesrose US$3.99 to $17.58 in early trading Thursday.
Over the past year, the shares have traded as high as $41.63 and as low as $6.25.
Gartner senior analyst Emily Andren told the E-Commerce Times that FreeMarkets is benefiting as companies look to the Internet for better prices in a tough economy. FreeMarkets, she said, “basically started” the idea of operating online reverse auctions, in which companies seek the lowest bids from competing suppliers.
FreeMarkets is in a good position as companies cut back on spending in tougheconomic times, Andren said.
“I think they’re managing to keep a certain amount of business and growing a little bit,” the analyst said. “They’ve been cutting costs and conserving their cash. I think they’re pretty well positioned to weather the storm.”
Pittsburgh, Pennsylvania-based FreeMarkets provides software and servicesthat help companies buy and sell goods and services over the Internet. Thecompany raised its revenue estimate for the quarter ending December 31st by$4 million, saying it now expects revenue and fees to total $44.7 millionto $46.7 million, up 10 to 15 percent from third-quarter levels.
Operating profit will be 5 to 9 cents per share, up from the 3 to 7 cents previously expected, FreeMarkets said after the close of trading Wednesday. The company did not give a prediction for its bottom line, saying only that the forecast excludes non-cash, stock-based expenses and goodwill charges.
Chief financial officer Joan Hooper said FreeMarkets’ existing clients areusing the company’s services more as they look for cost savings.
“During the quarter, a number of large customers have renewed long-term contracts and increased their commitment to use our e-sourcing software and services,” Hooper said.
Also on Thursday, FreeMarkets said UK-based glassmaker Pilkington extended itscontract with the company into next year, and signed up for additionalservices as well. Pilkington, the largest supplier of glass to theautomotive industry, also makes glass for the building and aerospaceindustry.
FreeMarkets plans to report results and issue an outlook for 2002 onJanuary 22nd.