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Join HyperPumper's Yahoo! Club. It's completely FREE and anonymous!
HyperPumper is making a baby gorilla list and checking it twice.
Want HyperPumper to add your favorite undiscovered baby gorilla to his strong buy list? Or to write about it in his daily column?
Don't worry. HyperPumper will never use your return Email address to spam you.
March 22, 2000 (Wednesday 10am EDT, trading hours)
Updated 2pm EDT with BlueLight.com/Yahoo! news
HyperPumper likes the looks of Mr. Nasdaq today. Get ready for the day-after rally.
DCLK, YHOO, CMRC, eBAY, AOL, ISSX, EGRP, AKAM, VIGN. Run'em up boyz!
HyperPumper likes YHOO, the stock,
Order on the Net rather than shop,
HyperPumper likes sites that sell dope,
Without those services, Hyper couldn't cope,
Hyper also likes CMRC and eBAY --
they give small biznesses some say,
The Pumper also likes that ISSX one,
Whose runup gives Hyper so much fun.
HyperPumper tenders these words to you,
Keep from making mistakes others do,
When BRK or PPOD calls for you to invest,
Avoid the urge and look to the west,
Real tech is here, here to stay.
Avoid K-O and make money today,
When you find you've run out of ham,
Shop at Egghead dot com, I am
One and only HyperPumper, dammit
This assuredly is no shit.
Hello Juno! Earthlink-Mindspring! AOL!
K Mart Corp.'s free Web access and e-commerce service BlueLight.com said Wednesday it has surpassed the 1 million-member mark less than four months after the site opened its virtual doors to the public.
In a press release, the San Francisco-based BlueLight.com said every week more than 30 million consumers shop at K Mart stores where millions of BlueLight.com CD-ROMs are snatched up by K Mart shoppers. The service is also distributed and promoted throughout Yahoo! Inc.'s network of Web properties.
A survey of BlueLight.com subscribers reported that 40 percent are new to the Web or did not have Internet access when they signed on, BlueLight.com said.
Floyd Hall, chairman, president and CEO of K Mart said in a press release that the key tool in reaching this member milestone is the company's strategic investors, which include Internet portal Yahoo!. YHOO is content provider for the site. Martha Stewart Living Omnimedia Inc. sells its home interiors products through the site, and Spinway.com, the free Internet access services provider, provides the ... well... free ISP services.
``These relationships will drive BlueLight.com to be one of the largest Internet service providers in the country, and will help narrow the gap between those Americans who have access to the Internet and the vast number who still do not,'' Hall said.
By 2003, more than 13 million U.S. online households are expected to use free access services, according to research firm Jupiter Communications. Of those, 8.8 million house
HyperPumper's recommendation for the day, every day, is to keep on pumping and stay long, be strong.
March 21, 2000 (Tuesday 6pm EDT, after the bell)
There are dips and there are dipheads. Don't be a diphead!
Mediaplex, Inc. (MPLX), a Net advertising infrastructure baby gorilla, and BMCMedia.com, a provider of interactive marketing solutions, today announced a new deal. According to this agreement, BMCMedia.com will use Mediaplex's MOJO(TM) technology as its primary ad serving solution throughout the Asia-Pacific region, including China, Hong Kong, Australia and Singapore.
Read: China and Hong Kong. 2.4 Billion potential eyeballs. 2.4 potential ears. 1.2 potential wireless Netputers.
HyperPumper says 2 thumbs up.
Mediaplex's MOJO technology allows advertisers to integrate their internal business information,
including price, inventory levels and customer data, into their online advertising campaigns.
HyperPumper has been high on MediaPlex before (Mar 9-10). As discussed in conjunction with DoubleClick, MPLX is a leading Net infrastructure gorillla in MOJO (mobile Java objects) technology, the only platform that delivers real-time messaging based on integration between an advertiser's internal business data, such as inventory, pricing and customer information, and that advertiser's online marketing initiatives. In addition, Mediaplex provides comprehensive online campaign services. Mediaplex clients include OfficeMax.com, eCOST.com, DATEK Online, and advertising agencies such The Interpublic Group of Companies and its subsidiaries McCann-Erickson/A&L and DraftWorldwide, Young & Rubicam, Publicis & Hal Riney, and Tonic 360 on behalf of their clients such as Sprint PCS and macys.com. Mediaplex is headquartered in San Francisco with offices in New York, the Silicon Valley, and Hamburg, Germany.
``Having reviewed existing third-party ad serving solutions, we chose the MOJO ad management solution because of its features, including real-time messaging capabilities, and its compliance with our privacy policy,'' said Alex Jordan, Campaign Director of BMCMedia.com in a company press release. ``We believe that Mediaplex is an advertising technology leader that will help BMCMedia.com further penetrate the Asia-Pacific market, including the emerging Chinese market.''
This technology has been double-byte enabled from the onset with a view towards participating in the anticipated growth of online advertising spending in China and the rest of the Asia-Pacific marketplace. This deal gives MPLX immediate reach into the exploding Asia market. Tim Favia, Mediaplex Executive Vice President of Sales & Business Development added, ``We are extremely pleased to be working closely with BMCMedia.com given their focus on delivering results-oriented solutions for their clients including HSBC, CETRA, Commonwealth Bank, Discvault, ANZ and One World Alliance.''
BMCMedia.com was formed in January 1998 and listed on the Australian Stock Exchange on
December 3, 1999. BMCMedia.com is a leading provider of interactive marketing solutions to
web site publishers, advertisers and advertising agencies in the Asia-Pacific region, based on the
number of offices and the number of web sites directly and indirectly represented.
BMCMedia.com currently operates from offices in Australia (Sydney and Melbourne), Hong
Kong, Singapore, Taiwan and Japan, and has exclusive mutual joint representation agreements
with Media999 in China and KT Internet's AdClick in Korea.
March 21, 2000 (Tuesday 3pm EDT, trading hours)
Wad happenned?
Yesterday an infamous Barons article (yet again) spooked Mr. Market over the weekend. HyperPumper reminds y'all:
Barrons is not a money managing firm. Neither is it an investment bank. Barrons is in the business of selling newspapers. To succeed, every once in a while they have to chime in with controversial attention-getting wild rantings to attract attention.
Haven't we been thru this before?
How many times have they ripped the Internet only to see Mr. Market git back up, dust itself off, and continue running the marathon?
Don't you guys get it? Barron's reporters are not money managers; they are journalists fer Christsakes. If those guys can pick stocks for real... they would not waste time publishing newspapers. They would be working at home like HyperPumper.
CMRC down 20 points today on news that YHOO and AOL are jumping headlong into the B2B markets. HyperPumper believes the YHOO and AOL moves signal GOOD news for CMRC -- it is further evidence that B2B is here to stay. CMRC provides services that agnostic marketplaces like YHOO and AOL cannot provide. YHOO and AOL will compete more against VerticalNet (VERT) and Ventro (VNTO) than against CMRC.
In related news, more analysts are jumping on the CMRC bandwagon and initiating coverage of this emerging gorilla. CMRC News
Bottom line: HyperPumper calls YHOO, AOL, and CMRC. But in at the dip! Read on!
March 21, 2000 (Tuesday 3pm EDT) during trading!
Mr. Market appears to be celebrating in anticipation of the long awaited FOMC interest rate hike.
Why is Yahoo! making a new run?
HyperPumper fess up to 4 reasons:
1. Yahoo!'s push into B2B is exciting. It is another illustration of Yahoo!'s ability to leverage its brand into this new market. First it's streaming media, then its etail, now it's B2B. Wad next? Global TV? Wireless? Remote healthcare?
2. Several of Yahoo!'s primary ad contracts are up for renewal. Recent negotiations have been very successful -- Internet ad rates at the premier sites like Yahoo!, AOL, and eBAY are strong, and portend increased revenues.
3. The eBAY factor.
4. The broadband factor, that will play out soon.
Just food for thought, children.
March 20, 2000 (Monday 3pm EDT)
After giving us the most recognized B2C consumer Web portal, Yahoo is now gunning to become an online gateway for business.
To B 2 B or not to B 2 B? If that is the question, Yahoo!'s new answer is a definitive "yes sirreeBob!"
The company Monday morning announced it has created a business-to-business, or B2B, directory that offers listings from e-business commerce sites for industrial and commercial supplies, from drills to steel.
The phrase "B2B" was ubiquitous in the press release.
Although Yahoo brings a popular brand to the business-to-business sector, it will face strong competition from other e-business networks which cater solely to commercial players. FMKT and Commerce One, the makers of software that forms the foundation for many of today's business marketplaces, are down on the news. But these players have already paved their way in the business commerce market. Other smaller nascent players like MediaPlex (MPLX) and Egghead.com (EGGS) are also tagging along waiting for their chance. ShopNow.com launched its B2Bnow.com site in January.
Although Yahoo targets small businesses, including office supply sellers and online postage services, this is the portal's first move to create a directory for business-to-business listings. Lycos and other runner ups have yet to respond. Yahoo!'s move essentially caught them off guard. Asleep at the wheel.
Hello!
Yahoo!'s move to set up its B2B Marketplace comes at a time when the nascent B2B sector is witnessing a nearly unprecedented explosion.
KaBoom! Gold rush! 49ers!
Net incubators, venture capital firms, consulting firms and
established technology companies are rushing to take part in what is
widely expected to become an Internet gold-mine.
This move is very interesting to HyperPumper in light of recent partnership discussions between eBAY and Yahoo! Can Yahoo! add value to such a partnership by drawing eBAY further into B2B, where eBAY can capitalize on its leading brand name to grab a slice of the giant B2B auction market? Ventro and FreeMarkets would be the losers in that event.
This will play out soon.
HyperPumper estimates that the B2B transactions in the United States are expected to increase 33 percent each year, with $2.8 trillion changing hands through business-to-business purchases. Yahoo's business marketplace allows business users to research, price and purchase products they need for their industries. The marketplace will include listings by Freemarkets.com for raw materials and parts as well as services. A new firm HyperPumper has never heard of, DoveBid.com, will also provide auction services at Yahoo's B2B exchange.
Monday March 20, 2000: 1am EDT, before the bell.
Baa humbug! Defrost the fridge.
Those of you who read HyperPumper's earlier B2B pronouncements must know that HyperPumper is high on business-to-business.
But Mr. Market still seems recalcitrant.
It's time to break out the cash, folks. Dig deep under the mattress and bring out the gold. Before it's too late.
Last week HyperPumper visited with the leading B2B companies at the annual Merrill Lynch bash. HyperPumper rubbed "elbows" with buddies like HB (you know who you are). HyperPumper is here to tell all.
So listen up.
Peter Pervere of Commerce One, Glen Meakem of FreeMarkets, and Mark Walsh of Vertical Net were there. Smaller but promising gorillas like MediaPlex (MPLX) where also represented. Bottom line: B2B e-commerce will be huge.
HyperPumper estimates that it could reach $2.5 trillion globally by 2003. HyperPUmper heard others throw around numbers bigger numbers, like $4.2 trillion and even $5.3 trillion. It all depends on whether you are counting just domestically, or internationally. It all depends on the adoption rates in Brazil, Europe, and China. Don't forget Japan, whose auto industry has been agressive in this arena lately.
But sticking to HyperPumper's conservative number, suppose you attach a relatively conservative sales multiple of two times sales to three times sales. Take out your calculator and hit the multiply button. You will see then that these projections leads to a potential market value of $5 trillion to $7.5 trillion.
Companies like General Motors, Ford (Yahoo's partner), and Daimler Chrysler are joining the fray. So you might worry about how much of this market valuation will belong to pure-play B2B providers like Commerce One, FreeMarkets, and the like, and how much will be captured by ``old-line'' companies like GM or Wal-Mart?
HyperPumper estimates that of the $2.5 trillion in expected revenue, 15% to 20% of this will be captured by pure-play providers. What does this mean? Why this proportion? In part, this will depend on the market structure of each individual industry segment or vertical market, as they say in the Biz. In oligopolistic markets dominated by several large players -- like OPEC, you gasoline consumers --- these large players have enough market clout to create their own exchanges and take a substantial part of the revenue generated for themselves. This is basically FreeMarkets's business strategy.
The best opportunity for pure-play B2B market makers may lie in industries that are fragmented into numerous buyers and suppliers who do not have sufficient power to dictate prices and supply.
Yadda yadda yadda.
What does this mean for the investor? Well, these estimates imply an aggregate market capitalization ranging from $800 billion to $1.5 trillion.
Who are HyperPumper's favorite baby gorillas in the B2B sector? Here is a brief list.
VNTO
Chemdex recently changed its name to Ventro (VNTO), and its stock price promptly plummetted. Mr. Market believes VNTO is a FreeMarkets (see below) copycat. Mr. Market could be right. But VNTO -- having ballooned to 400 employees; who says Net is low overhead? -- wants to expand beyond chemicals, and leverage its infrastructure platform across several industries to obtain economies of scale.
FreeMarkets
FreeMarkets appears to be way ahead of its competitors in the race to claim first-mover advantage in online B2B auctions. The market dynamics are unique for each type of product that can be sold over the Web. To address this, FreeMarkets currently offers 29 different auction formats that are best suited to the type of product offered for sale.
While FreeMarkets is targeting many different industries and products, over half of their activity comes from the metals and metals-related industries.
FreeMarkets doesn't plan on charging customers a percentage of the money that it saves them. The problem is that when a customer gets a big benefit in the form of cost savings, they're typically not excited about giving that back by writing a big check. More importantly, the initial cost savings of moving a company's procurement to the Web might be high at the beginning (i.e. 40%), but subsequent reductions will be much smaller.
So to charge a percentage of the cost savings after the initial move to the Web will be difficult. Once the initial
cost savings are accomplished, the main benefit of Web purchasing would be the knowledge that they are at
least paying a fair market value for the goods and services they purchase.
FreeMarkets is skeptical of the ability of non-neutral exchanges such as that being constructed by the automakers: General Motors, Ford, and Daimler Chrysler. You see, FMKT believes that to be successful in the long run, the marketplace must be a "level playing field" not controlled by the buyers. The marketplace must be agnostic.
As an agnostic player, FreeMarkets does not screen or qualify suppliers to participate in the auctions they run. Instead, FreeMarkets provides as much information as possible so that buyers are better able to determine which suppliers they wish to buy from. FreeMarkets is currently able to extract data from existing enterprise resource planning (ERP) systems, but isn't yet capable of integrating their data to ERP implementations.
Commerce One
HyperPumper has covered this granddaddy of all b2b champs. CMRC is HyperPumper's favorite child.
MediaPlex
MPLX is HyperPumper's "infrastructure" -- net advertising -- B2B play all rolled into one. HyperPumper talked about MPLX in the March 10 diary entry. Recently beaten down, wad a deal, MacNeil!
Vertical Net
CEO Mark Walsh recently announced that a ``major corporation'' would soon take a large stake in one of Vertical Net's 56 vertical communities, with the intent of spinning it out as a separate public entity at a later date.
Walsh explained that owning a portfolio of vertical players is better than trying to be the one dominant player in a single industry vertical. The latter has often been offered as a better strategy because having ``domain'' expertise in one industry will be crucial. Walsh countered that the revenue stream in certain vertical markets is not be large enough to support the infrastructure costs associated with building out a full B2B exchange.
CEO Walsh discounted the importance of having domain expertise, noting that in his experience with Vertical Net's different properties, 90% of the individual buying process is the same across all industries. Thus, it can be replicated more easily than is typically believed. As far as the role of large distributors and their ability to become big players in B2B exchanges, Walsh noted two obstacles they will face. First is the oft-heard cry from the B2C (business-to-consumer) space that legacy companies have to worry about appeasing their current shareholders. Consequently, they can't afford to take the hit to earnings that building out a satisfactory e-commerce venture would entail.
Can't afford the risk, man.
The second obstacle is that many distributors don't carry goods from all vendors, so buyers don't get the full advantage of being on an on-loan exchange. Bigger distributors may have more of a chance at surviving than the smaller ones.
Walsh went on. Vert's acquisition of B2B exchange platform provider tradeum complements NECX, their recently acquired subsidiary that operates an exchange for trading semiconductors, computer parts and networking equipment. The NECX exchange is similar to the New York Stock Exchange, complete with brokers and a tote board quoting the most recent prices for electronic components. Brokers in all industries are usually motivated to pursue the largest deals because they get the most commissions that way. Tradeum is a way of using the Web to capture the business of smaller customers who might otherwise get lost in the shuffle.
The switching costs that Vertical Net's customers face is somewhat low, but Walsh thinks that the real barrier
to entry will be achieved by building a large audience and community-oriented site. Final bottom line:
Pssst: HyperPumper likes RNWK, eBAY, and CMRC next week.
Disclaimer: HyperPumper's Diary and any opinions discussed herein are presented for entertainment purposes only. HyperPumper may or may not be long securities he discusses here. HyperPumper does not currently have any short positions. HyperPumper does not recommend that anybody act on the opinions expressed herein, which are presented solely for entertainment purposes, without doing independent due diligence.
