B2B: Fiddling while the market burns?

Business-to-business stocks may be tanking, but don't tell that to the infrastructure vendors, e-marketplace honchos and industry watchers speaking at the Line56 B2B conference here Tuesday. They insisted that there's still lots of life left in the B2B space.

Speakers agreed that there are still rewards ahead for companies that supply the software and hardware infrastructure upon which B2B customers are building their commerce solutions.

And several participants talked up as next-wave bets companies that provide "horizontal services"--such as logistics, billing, customer relationship management tools, and the like.

Speakers also liked the future potential for so-called private exchanges, or smaller, secured e-marketplaces designed to connect a finite set of trading partners.

The bloom's off the rose "We do see the seeds of an important B2B recovery," said Chris Vroom, managing director of Credit Suisse First Boston Technology Group's B2B equity research.

Vroom said he expected this recovery to occur once the market stabilized. "And that will happen at 2 p.m. today," he quipped.

'The last 12 months have been quite a ride. It's taken a lot of courage.' -- Ariba CEO Keith Krach

In recent months, the carnage in B2B stocks has been vicious.

Ariba, which has held up better than its peers, is trading at about 66 a share, down from a high of 183. Commerce One is trading at 35, down from a high of 165; FreeMarkets is near 25, down from 370; PurchasePro is hovering around 18, down from 87; and VerticalNet is just under 7, down from 148.

They once were kings Vroom noted that B2B rose to become the hottest tech market sector in the second half of 1999. In that year, at least 17 B2B companies went public. Now at the end of 2000, the bloom is off the rose.

Industry watchers like Ben Smith, vice president of EDS/A.T. Kearney Ventures, made what would have been considered a sacrilegious statement just months ago.

"Not all B2B opportunities can be effectively financed with venture equity," Smith told the Line56 audience.

While Smith said what he termed "multi-enterprise software" companies--or those providing the building blocks for B2B commerce platforms from the likes of Ariba, Arzoon and Web Methods--were still ripe for venture funding, old-line enterprise software vendors, consortia and corporations looking to launch "e-projects" in the B2B space were not.

'Scary fun'? Ariba CEO Keith Krach said during his morning keynote that he considered the roller coaster-like market "scary fun."

"The last 12 months have been quite a ride. It's taken a lot of courage," said Krach, who heads what has been one of the highest B2B fliers in the past year.

Krach, like a number of other speakers, emphasized the need for B2B suppliers and customers both to get back to basics.

He said the B2B players who will be able to withstand the market slide are those who realize B2B is all about helping customers cut costs and retaining and attracting customers.

"The press-release wars are over. It's all about execution," Krach summarized.

Line56's New York conference is the first U.S.-based event sponsored by B2B E-Commerce International, the publishers of Line56 magazine.

Additional reporting by ZDNet Inter@ctive Investor's Larry Dignan