B2B player pledges profit and IPO

Giant car exchange's ship comes in...

Car industry exchange Covisint has said it is on track to turn a profit by mid-2002 and that an IPO is on the cards for 2003, despite the current economic turbulence threatening to stretch into next year. But the rush to go public stems from investor pressure rather than deep-rooted confidence in the economy, according to new European MD Lars Olrik. Speaking today at a transport industry awards ceremony, he said that Covisint was under pressure to deliver its investors a return on their initial investment within a specified time frame. Olrik told silicon.com that he expected an IPO by 2003, although it could be as early as next year if the market picks up. "We're not a charity, we do not have the luxury of sitting back, we have to IPO within a certain time frame because of our investors. The strategic ambition of why we were created was to make a profit," he said. Flotation is also a prerequisite of the BundesKartel's terms of approval. Germany's anti-monopoly watchdog, and the EU, along with the FTC, thoroughly vetted Covisint before its establishment in January 2000. "We all have a strong interest in ensuring an IPO becomes feasible, it's got to do with visibility and transparency in the market," Olrik said. Last year Covisint was given a market valuation of £5bn. Daren Siddall, research analyst with the Gartner Group, was more cautious about Covisint's hopes of an early profit, claiming customers were more interested in long term viability rather than short lived profit. "What Covisint really needs to think about now, rather than profit, is making enough money to sustain operations, and reinvesting in development, so it doesn't have to go back to its investors," he warned. He added that it would be difficult for any marketplace to make a profit or IPO over the next few years because the market still lacked customer confidence. Despite getting European operations of the ground just six months ago, and still dealing with teething problems, Olrik said he expected European sales to account for up to 36 per cent of next year's profitability targets.