Breakfast With The Fool: Commerce One Reports Q3 ,
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            B R E A K F A S T   W I T H   T H E   F O O L
                    Friday, October 20, 2000

benjamin.rogers@enron.com
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"I was hot. I was smoking 'em. I was having a good time. Even a
blind pig finds an acorn sometimes."
-- Bill Clinton, after shooting a golf round of 79, fulfilling a
lifelong ambition to break 80


COMMERCE ONE REPORTS Q3
Internet B2B company Commerce One posted solid Q3 results after
the market's close yesterday and now forecasts profitability by
the second quarter of next fiscal year.

By Mike Trigg

Internet marketplace software provider Commerce One (Nasdaq:
CMRC) reported impressive third-quarter results after the
market's close yesterday, highlighted by new customer additions
and the signing of several global mega-exchanges. The
announcement came one day after business-to-business (B2B)
juggernaut Ariba (Nasdaq: ARBA) declared its own results,
becoming the first B2B company to report a breakeven quarter.

Commerce One's fiscal third quarter (ended September 30) net
loss, excluding charges, was $14.7 million, or $0.09 per share,
compared to $10.3 million, or $0.07 per share, in the same
period one year ago. The Street consensus called for a loss of
$0.12 per share. The positive results prompted management to
revise its initial projection, now calling for profitability by
next year's fiscal second quarter (ends June 30).

However, revenue figures tell the real story because B2B
companies are still in a stage of hypergrowth. Commerce One's
revenues increased from $62.7 million in the previous period to
$112.7 million. That's 80% sequential growth. The revenue mix
was 58% licenses (65% last quarter), with services accounting
for the remaining 42% (35% last quarter). Nevertheless, as I
mentioned earlier this week, deferred revenues and the amount of
network revenues within service revenues were two important
factors to track. Let's take a look at those quickly.
http://www.fool.com/m.asp?i=162547

Commerce One reported network revenues of $10.1 million, a
sequential increase of $3 million. This number is important
because it represents the amount of revenue sharing that
occurred on active marketplaces and will substantially increase
as more exchanges go live. Moreover, it currently represents
mostly auction and subscription fees. However, as exchanges
mature, it will include a greater amount of value-added and
transaction-based revenue.

Deferred revenues took a jump from $62 million in the previous
period to $95 million. Deferred revenues are a good liability
because they represent cash that has been realized before at
least a portion of the services have been completed. It's an
important figure because it provides up-front investment capital
and signifies management isn't overstating business. This
quarter's increase can in part be attributed to the company's
partnership with SAP (NYSE: SAP); however, management would not
disclose to what amount.

The alliance with SAP continued to show major traction, despite
being just 90 days old. Through the joint partnership, the
company announced several mega-exchanges that include eHitex
(high tech), Enporion (utility), Quadrem (mining and metals),
and ForestExpress (paper and forest products). This gives the
company 60% market share for top vertical exchanges. To hear
Ariba CEO Keith Krach comment on the Commerce One and SAP
alliance, check out Paul Commins' recent Rule Breaker column.
http://www.fool.com/m.asp?i=162548

Overall, the company posted a solid quarter and continued to
execute, growing its total of 72 marketplaces to 107. Meanwhile,
the number of live exchanges improved to 47, and the customer
count improved by 96 to 316. The quarter was particularly
impressive considering the acquisition of AppNet was only on the
books for two weeks, and significant contributions will be made
in the services portion of revenue upon a full quarter of
contribution.
_________________________________________________________________

NEWS TO GO

Fiber optic equipment maker Corvis Corp. (Nasdaq: CORV)
announced better-than-expected fiscal third-quarter earnings
after the market's close yesterday. The company reported a pro
forma loss, excluding goodwill expense and equity-based pay, of
$23.9 million, or $0.07 per share. The Street consensus called
for a loss of $0.09 per share. Revenue came in at $22.9 million.
However, the company still relies heavily on Broadwing (NYSE:
BRW), which began commercial deployment of Corvis' suite of
optical products in the quarter. Corvis closed at $59.60 per
share in the regular session and jumped as high as $71 per share
in after-hours trading.

Internet auction company eBay Inc. (Nasdaq: EBAY) announced its
third-quarter earnings, exceeding Street expectations. The
company said its earnings, excluding charges, were $19.1
million, or $0.07 per share, compared to $3 million, or $0.01
per share, in the year-ago period. The Street consensus estimate
was $0.04 per share. Revenues improved year-over-year from $58.5
million to $113.4 million. In a conference call yesterday, eBay
management stated the positive results were due to increased
exposure in new geographic regions and additional product areas.
Also, it cited a shift toward higher-margin products, such as
cars.

Voice recognition software provider SpeechWorks (Nasdaq: SPWX)
reported third-quarter earnings after the market's close
yesterday, with revenues improving nearly threefold
year-over-year and earnings that exceeded Street expectations.
The Boston-based company reported a loss, excluding charges, of
$5.4 million, or $0.20 per share, compared to a pro forma loss
of $3.7 million, or $0.19 per share, in the same period last
year. The Street consensus forecasted a loss of $0.23 per share.
The company reported revenue of $8.6 million, a 237%
year-over-year increase.

The world's largest maker of cellular phones, Ericsson (Nasdaq:
ERICY), reported fiscal third-quarter earnings this morning and
cut sales forecasts and profit figures for full-year 2000. The
company attributed the revised outlook to losses in its mobile
phone division and will now place a greater emphasis on wireless
network equipment. The Swedish company is losing valuable market
share to Finnish phone maker Nokia (NYSE: NOK), which yesterday
predicted profitability in the fourth quarter. It also announced
that it would move Swedish and U.S. phone production to Asia,
Latin America, and Eastern Europe. Stay tuned for more on this
story.

Get yesterday's Foolish market wrap-up with one swift click.
http://www.fool.com/m.asp?i=162549
_________________________________________________________________

EDITOR'S PICK

Ariba CEO Keith Krach talks to the Fool's Paul Commins about the
roles customers and partnerships have played in the success of
the B2B services company.
http://www.fool.com/m.asp?i=162550
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