Out of the Red, Into the Black

Analysts hope for a B2B rebound, as Ariba finally posts a profit.

Download the authoritative guide:

In an otherwise bleak technology year ahead, B2B could prove to be a bright spot.

Wall Street investment firms are expecting the currently sagging B2B market to bounce back. "The clear take-away is that B2B is the leading segment," says Jamie Friedman, a VP at Goldman Sachs & Co. "We are very bullish on certain segments of B2B."

Goldman Sachs is expected soon to publish a corporate survey that shows a spike in the spending trends for B2B initiatives. The survey notes that overall IT spending in B2B will jump to the 20 percent range from the low teens, says Friedman.

In addition, the Goldman Sachs survey of IT and networking managers found that growth in the B2B sector will decelerate to 7.5 percent this year from 9.5 percent, confirming a similar report issued two weeks ago by Merrill Lynch.

Further reading

Leading the charge in the B2B space last week was Ariba, which reported a first-time profit. The company posted revenue of $170.2 million and net income of $14 million for the period ended Dec. 31.

Although analysts were pleased with results, some downgraded Ariba because its move from perpetual licenses to term licenses could hide slower growth.

In addition, Ariba this week will announce a deal with Comergent Technologies to integrate Comergents Distributed E-Business System into Aribas B2B Commerce Platform. Comergents product includes a configuration engine that should enable suppliers of more complex products to use Aribas software and network, according to Matt Kilguss, VP of business development at Comergent. That should help build liquidity, the Holy Grail of B2B.

Meanwhile, VerticalNet last week lost its celebrity president and CEO, Joe Galli, who jumped ship after five months to go back to the consumer packaged-goods industry. Hes now president and CEO of Newell Rubbermaid. Galli garnered attention for VerticalNet when he left Amazon.com after a year to join the Horsham, Pa., company. In the latest switch, Mike Hagan, co-founder of VerticalNet, replaces Galli as president and CEO.

Mark Walsh, VerticalNets chairman, says B2B will be a bright spot this year. "[In] the sector were in, creating platforms for companies procurement and supply chain, the ROI is so significant, and we dont see a lot of potential for slowdown in the stuff we make."

Even though this sector looks much brighter, many B2B stocks have yet to regain their luster.