B2B-Perle: ESpeed (931117) - 500 Beiträge pro Seite

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IPO bei USD 22, High bei USD 63 3/4, Low bei USD 30.

Gleiche Performance wie ARBA in Sicht? Mal schauen. Heute jedenfalls schon +5 USD!!!

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ESpeed is hungry for B2B markets
By R. Scott Raynovich
Redherring.com
January 14, 2000

Nearly a thousand feet above Wall Street on the 103rd floor of the World Trade Center, Fred Varacchi, 33-year-old president of eSpeed (Nasdaq: ESPD), proudly showed us his state-of-the-art data center, which includes racks of Sun Microsystems (Nasdaq: SUNW) Sparcstations, two Sun Ultra Enterprise servers, some Compaq Computer (NYSE: CPQ) DEC Alpha-based servers, and millions of dollars` worth of other hardware and software.

"This is probably the cleanest data center you`ll ever see," says Mr. Varacchi. "And this may be the highest data center in the world." We started thinking about all the data centers in Colorado, but decided that arguing about the difference between height and altitude seemed like splitting hairs.

Mr. Varacchi, an intense veteran of bond-trading who displays an autographed Wayne Gretzky uniform and an autographed Ted Williams photograph in an office with sweeping views of Manhattan, has an ambitious plan to turn his sky-high data center into an electronic engine for business-to-business (B2B) markets. The data center was built by Cantor Fitzgerald, the parent company of eSpeed, and has long handled Cantor`s high-tech trading in fixed-income securities. Cantor is said to hold more than 50 percent of the global market in those financial instruments.

Last year, Cantor decided the bond market, which still is largely conducted by human beings talking on phones, was being replaced gradually by networks, which use patented software to match buyers and sellers. There was internal debate about the business model of using an electronic network to replace phones, but Mr. Varacchi, who`s also Cantor`s chief operating officer, and eSpeed CEO Howard Lutnick, who`s also Cantor`s chairman, decided eSpeed should be spun off as a new company that`s free to use the technology to create electronic markets for bonds or any other sophisticated business product or commodity.

If you look at what happened to companies such as Merrill Lynch (NYSE: MER) when they defended the traditional equity brokerage business as more nimble and when technology-savvy retail brokers such as Charles Schwab (NYSE: SCH) ate their lunch, it seems as if Cantor was making the smart move.

SELECTIVE CANNIBALISM
"It`s no secret, Cantor is cannibalizing itself," says Mr. Varacchi. "But that`s better than being cannibalized by somebody else. Cantor didn`t want to get Schwabbed."

Shortly after eSpeed`s IPO on December 10, in which 9 million shares were issued at $22 a share, the stock rose as high as $60 before settling into the mid-$30s, making it more attractive to investors now than in the days immediately following the IPO.

An attractive point about the company is that it already owns and has built substantial technology. The technology, which includes a proprietary, patented matching engine and a world-class fault-tolerant network, was built over a two-decade period within Cantor. This means the company won`t incur the massive ramp-up costs that many of the B2B players coming to market must face. In fact, when we recently toured the company`s impressive data center, it was mind-boggling to think that eSpeed essentially inherited a global network backed by dozens of Sun Sparc servers and DEC Alphas. In exchange for spinning off the technology and the executives, Cantor took an 80 percent stake in the company.

Unlike many of the B2B blockbusters -- such as Ariba (Nasdaq: ARBA), Purchasepro.com (Nasdaq: PPRO), and CommerceOne (Nasdaq: CMRC), for example -- eSpeed has kept a low profile. After exiting its SEC-imposed quiet period on January 5, the underwriters, Chase Hambrecht & Quist, Thomas Weisel, and Warburg Dillon Read, all issued predictable Buy reports. Other than those from underwriting bankers, however, there aren`t any analysts who cover the stock, so it`s been difficult to get an objective take on the company.

TAKERS?
Mr. Varacchi described an ambitious plan to migrate the bond-trading engine -- which he describes as the Nasdaq of the bond market -- into just about any major B2B market with opportunity. Treasuries and municipal bonds will come first, then large industrial commodities such as power and bandwidth. The company doesn`t seem particularly concerned with the front-end or the portal side of operations, as their business model dictates they collect a transaction fee by providing the engine on the back end that matches buyers and sellers. In other words, they`ll partner with anyone that wants access to a market. For example, eSpeed could provide a bond-buying market-matching system to an online broker, who would pretty it up for consumers who are interested in buying bonds over the Internet.

Mr. Varacchi wouldn`t discuss specific deals, but judging from some demos of municipal and treasury-bond trading technology, we imagine they`ll start with some of the online brokers. The bond market still is largely based on personal relationships and phone calls, which means that electronic bond trading should benefit from the same effects the Internet had on equity markets: faster transactions, lower spreads, and higher volume.

"Everybody talks about the dangers of volatility," says Mr. Varacchi. "We love volatility."

That`s where the eSpeed picture gets really interesting. Because the company purports to be an independent marketplace for bonds or any B2B product, the company will be participating at the transaction level in markets that reach trillions of dollars in volume. We believe that a transaction-based business model in B2B business exchanges is quite possibly the best place to be positioned in early 2000. If eSpeed executes on this vision, you may start hearing about eSpeed as often as you hear about B2B technology plays such as Commerce One or Chemdex (Nasdaq: CMDX). Think of the company as a B2B infrastructure play.

The big question about B2B exchanges, however, is figuring out how a marketplace provider can negotiate the byzantine complexities of individual vertical markets. After all, trading oil futures on ETrade (Nasdaq: EGRP) isn`t quite the same as selling books over the Internet. Mr. Varacchi and eSpeed say that because they come from the firm that conducts over 50 percent of the transactions in the fixed-income securities market, they know bonds, and that`s where they`ll start.