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GM drops FreeMarkets pact
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January 4, 2000: 2:32 p.m. ET
Canceled deal hurts shares of business-to-business Internet auction site
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NEW YORK (CNNfn) - Business-to-business Internet auction company FreeMarkets Inc. confirmed Tuesday that General Motors has canceled a pact for its online auction services for industrial parts.
The Pittsburgh-based company said the cancellation by the world’s largest automaker would not have an impact on its 2000 revenues or operating results, but the news sent the firm’s stock down by as much as 11 percent.
Shares in the company, a soaring Internet stock that has risen as much as 670 percent since its Dec. 10 Nasdaq debut, dropped 38-7/16 to 303-7/16 Tuesday afternoon.
FreeMarkets (FMKT) said that the General Motors deal represented 17 percent of its revenue from January to September 1999, but this percentage had dropped to about 10 percent in the 1999 fourth quarter.
"We had expected the percentage to decline further in 2000 even had our agreement continued," said company CEO Glen T. Meakem. The company’s other clients include The Quaker Oats Co. (OAT) and Honeywell International Inc. (HON)
General Motors (GM) did not respond to a request for comment.
Meanwhile, Donaldson Lufkin & Jenrette started coverage of FreeMarkets Tuesday with a "buy” rating, setting a 6-1/2 month price target of $550 for the stock. Wit Capital also started the stock as a "buy,” while Goldman Sachs started coverage with a "market outperform” rating. 
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FreeMarkets
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