NEW YORK (CNNfn) - Software giant Microsoft Corp. has thrown its weight behind VerticalNet Inc., sending shares of the business-to-business Web portal soaring more than 23 percent.|
On Thursday, Microsoft (MSFT) said it would take a $100 million stake in the Horsham, Penn.-based company, which operates 55 industry-specific Web sites designed to connect buyers with suppliers of goods and services.
VerticalNet is one of a growing number of B2B Internet ventures, which are fast becoming some of the most popular dot.com stocks in the market.
While the business model has yet to prove itself, shares of companies that provide those kinds of services - including FreeMarkets Inc. (FMKT), Internet Capital Group (ICGE) and Commerce One (CMRC) - have been some of the highest flying names on Wall Street.
Shares of VerticalNet, which went public at $16 per share last February, ticked up 44-27/32 to 238-13/32 in morning trading on Nasdaq on news that the Redmond, Wash., software leader was joining the B2B Internet fray.
"Microsoft brings outside credibility to the strategy," Steven B. Frankel, an analyst at Adams, Harkness & Hill in Boston, told CNNfn.com.
"They also bring money to the table," Frankel added. "And in a dot.com business, that's always an issue."
During the nine months ended Sept. 30, 1999, VerticalNet posted revenue of $10.7 million and a net loss of $38.2 million.
For its part, Microsoft, which will hold a 2 percent interest in VerticalNet, said it would promote the site through several of its online properties, including its MSN network of Internet services; Microsoft bCentral, a site dedicated to small businesses; as well as its main corporate Web site, Microsoft.com.
In turn, VerticalNet has agreed to use Microsoft-developed technology as the underlying platform throughout its business. That includes upgrading to the soon-to-be released Windows 2000 operating system and other network software, as well as its "Next Generation Windows Services," which will be Internet-based and useable by a range of devices.
"Microsoft gets a high profile dot.com adopting its technology, and it gets a B2B presence," Frankel said. "This is clearly a positive for both companies."
Microsoft is also committed to buying "several thousand 'storefronts'" from VerticalNet. Storefronts refer to individual sites for specialized businesses.
Mark Walsh, VerticalNet's president and chief executive, said Microsoft's storefront commitment would guarantee VerticalNet more than $200 million in revenue over the next three years.
-- from staff and wire reports