eCommerce
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INTERNET COMMERCE AND INFRASTRUCTURE
Gaining momentum.
January 1999
Online spending is on the rise as consumers and corporations grow less nervous about the security issues surrounding electronic commerce. The International Data Corporation (IDC) projects that global Internet commerce spending--which includes everything from retail sales to business-to-business transactions--will reach $32.4 billion this year, up from $12.4 billion in 1997. Indeed, the research firm is projecting explosive growth for the next few years. By 2002, says IDC, annual e-commerce spending will total $425 billion. (The Commerce Department offers a more conservative estimate of $325 billion.)
The leading online consumer vendor is, of course, bookseller Amazon.com. In its second appearance as a Herring 100 public company, it has proved that given sufficient selection, service, and value, consumers are increasingly willing to send their credit card numbers into the ether. The company's revenues were $147.8 million for 1997, up from $15.6 million for 1996. And at our press time, Amazon.com's stock was trading at more than five times its offering price of $18.
Business-to-business software vendors are equally, if not more, important to Internet commerce's growth: according to Forrester Research, 78 percent of overall e-commerce spending is being generated by business-to-business transactions. (That percentage is expected to fall, however, as e-commerce becomes more mainstream.) Sterling Commerce remains at the forefront of the business-to-business sector. Its electronic data interchange (EDI) systems are already used by more than 37,000 banking, retail, and telecommunications customers, primarily for payment processing. Sterling continues to integrate its EDI networks with the Internet to make the systems more accessible to smaller customers.
The developers of the tools and systems that enable electronic commerce are growing quickly as well. HNC Software, another Herring 100 repeat performer, develops neural-network software that can recognize patterns indicative of probable fraud and can forecast inventory needs for insurance and retail companies. Also going strong is Tibco, an independent operating unit of the Reuters Group, a general news agency and financial data distributor. Tibco supplies Web application integration technologies to banks and blue-chip customers including Motorola and Chevron. In June it entered a joint venture with the Nasdaq exchange to streamline the distribution of stock prices and other financial data to investors. IBM also deserves repeat honors for successfully reimagining itself as a developer of e-commerce products like HomePage Creator, a point-and-click site-development and hosting software package that accommodates up to 500 items in an online catalog.
We are recognizing newcomer SCM Microsystems, too, for its hardware and software that facilitates online purchasing by translating information from smart cards to PCs, workstations, and virtual private networks. SCM held one of 1997's top-performing initial public offerings, and its stock is hovering at more than three times its offering price.
The applications within electronic commerce may seem somewhat disparate, but their many focuses reflect the Internet's maturing infrastructure and its fast-growing offshoots.
AMAZON.COM
Seattle, WA
Web-based sales of books, videos, and CDs.
TICKER AMZN
FOUNDED 1994
PHONE 206/622-2335
EMPLOYEES 614
MARKET CAP (6/30 $M) 4,900.0
PRICE (6/30) 99.75
STOCK PRICE GROWTH (%) 978.4
REVENUES ($M) 219.1
REVENUE GROWTH (%) 609.6
NET INCOME ($M) -33.8
NET INCOME GROWTH (%) N/M
PROFIT MARGIN (%) N/M
HNC SOFTWARE
San Diego, CA
Software for decision support, inventory management, and credit- and debit-card fraud detection.
TICKER HNCS (NASDAQ)
CEO Robert North
FOUNDED 1986
PHONE 619/546-8877
EMPLOYEES 70
MARKET CAP (6/30 $M) 1,000.0
PRICE (6/30) 40.81
STOCK PRICE GROWTH (%) 7.0
REVENUES ($M) 111.4
REVENUE GROWTH (%) 63.8
NET INCOME ($M) 10.7
NET INCOME GROWTH (%) -5.5
PROFIT MARGIN (%) 9.6
IBM
Armonk, NY
Distributed computing architecture, application server infrastructure, and Web site development tools.
TICKER IBM (NYSE)
CEO Lou Gerstner
FOUNDED 1924
PHONE 914/765-1900
EMPLOYEES 269,465
MARKET CAP (6/30 $M) 108,300.0
PRICE (6/30) 114.8
STOCK PRICE GROWTH (%) 27.2
REVENUES ($M) 78,818.0
REVENUE GROWTH (%) 2.8
NET INCOME ($M) 5,934.0
NET INCOME GROWTH (%) 1.4
PROFIT MARGIN (%) 7.5
REUTERS GROUP
London, England
Real-time financial data and transaction systems.
TICKER RTRSY
FOUNDED 1916
PHONE 206/171-250-1122
EMPLOYEES 16,119
MARKET CAP (6/30 $M) 16,200.0
PRICE (6/30) 68.50
STOCK PRICE GROWTH (%) -5.8
REVENUES ($M) 4,784.0
REVENUE GROWTH (%) N/A
NET INCOME ($M) N/A
NET INCOME GROWTH (%) N/A
PROFIT MARGIN (%) N/A
SCM MICROSYSTEMS
Los Gatos, CA
Hardware and software fot smart cards.
TICKER SCMM (NASDAQ)
CEO Robert Schneider
FOUNDED 1990
PHONE 408/370-4888
EMPLOYEES 78
MARKET CAP (6/30 $M) 700.0
PRICE (6/30) 62.50
STOCK PRICE GROWTH (%) N/A
REVENUES ($M) 31.2
REVENUE GROWTH (%) N/A
NET INCOME ($M) 2.4
NET INCOME GROWTH (%) N/A
PROFIT MARGIN (%) 7.7
STERLING COMMERCE
Colombus, OH
E-commerce software and network services.
TICKER SE (NYSE)
CEO Warner Blow
FOUNDED 1995
PHONE 614/793-7000
EMPLOYEES 1,700
MARKET CAP (6/30 $M) 4,400.0
PRICE (6/30) 48.50
STOCK PRICE GROWTH (%) 47.5
REVENUES ($M) 413.7
REVENUE GROWTH (%) 36.2
NET INCOME ($M) 71.7
NET INCOME GROWTH (%) 5.8
PROFIT MARGIN (%) 17.3
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