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Ariba, i2 lose customer
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October 2, 2000: 6:11 p.m. ET
B2B e-commerce stocks hit as Health Care Exchange goes with CentriMed
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NEW YORK (CNNfn) - The stocks of B2B software companies Ariba and i2 Technologies were hit Monday after a key potential customer decided not to use their software - at least for now.
Ariba, i2 and IBM had formed an alliance to become the supplier of hardware and software to the Global Health Care Exchange, an independent Internet-based health care trading exchange formed by Johnson & Johnson, GE Medical Systems, Baxter International, Abbott Laboratories and Medtronic.
However, the Global Health Care Exchange decided instead to purchase CentriMed, a privately held software company focusing on e-procurement solutions for health care providers, and use CentriMed's technology for the exchange. CentriMed is partly owned by the Internet company incubator Internet Capital Group (ICGE: Research, Estimates).
"We're very pleased that the healthcare industry's leading independent exchange has chosen CentriMed as its technology platform," said Bob Stockman, the company's chairman, in a statement. "This acquisition marks more than just a great milestone in CentriMed's corporate development -- it is a win for healthcare and will lead to greater efficiency for the entire industry."
In response, Ariba's (ARBA: Research, Estimates) stock declined $16.19, or 11.3 percent, to $127.06, while i2 (ITWO: Research, Estimates) dropped $17.19, or 9.2 percent, to $169.88. Both companies' stocks are high-flying and volatile. Shares of i2, for example, are about 11 times higher than their 52-week low of $15.18, even after Monday's drop. The company's stock sells for more than 400 times the 41 cents per share analysts estimate it will earn in all of 2001. 
ICG received approximately $15.2 million in cash from the Global Health Care Exchange for its stake in CentriMed, and ICG will receive up to an additional $15.5 million in cash if CentriMed meets certain performance goals. ICG originally paid $8 million for its stake in CentriMed in early 2000.
Ariba spokeswoman Ellie Javadi said that Ariba and i2 are still in negotiations with the Global Health Care Exchange, and that the exchange's decision to purchase CentriMed doesn't rule out the use of software from the two companies or hardware from IBM in the future.
"The strategy of purchasing a company to provide software for an exchange is a unique one that we haven't seen yet," she said. 
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