So that's the sound of a bubble bursting. At press time, the Nasdaq had plunged 25.3%, the Dow-was down 5.6%, the federal government was punching out Microsoft and there was a general uproar over the derailment of the New Economy.

But lost amid the clamor surrounding the April "correction" in the stock market was this: Like nature, investment capital abhors a vacuum, which means the impending shake-out among Web retailers might spell good news for other Internet companies, notably those in the business-to-business sector.

True, the heady days when Wall Street bulls and venture capitalist true-believers poured millions into loss-leading Internet concerns may be over for good. The feds, spurred by Alan Greenspan's mandarin pronouncements, also are cracking down on e-commerce. In addition to the ruling against Microsoft, both the Securities and Exchange Commission and the General Accounting Office are taking steps to control how Internet firms state earnings and represent their financial health.

That bodes ill for many retail dot-coms, whose eye-popping market caps have disguised their financial weakness. For B2B companies, where profitability is at least on the horizon, the future looks brighter. The more incisive question, however, is whether the latter group can convert short-term gains into long-term returns, or whether they, like their B2C brethren, are destined for hard times.

Forrester Research predicts that B2B e-commerce will reach $2.7 trillion in 2004, compared with $406 billion this year. What's more, the research firm states in a recent report that emerging wholesale e-companies over the next five years will capture more than 50% of online business trade in the United States.

"U.S. businesses are universally preparing to buy and sell online, leveraging the Net to build deeper relationships with their business partners," says Steven Kafka, an e-business analyst at Forrester, in the report.

Among financial technology companies catering to this market, vendors like Ariba Inc., Bottomline Technologies Inc., Commerce One Inc. and Intelisys Electronic Commerce Inc. each have landed lucrative contracts with financial institutions to develop B2B offerings (see table at left).

Among big banks, Bank of America Corp., Chase Manhattan Corp., Citigroup Inc., First Union Corp. and Wells Fargo & Co. are all launching big-bucks B2B portals that link corporate customers and suppliers. Smaller institutions such as PNC Financial Services Group and Wachovia Corp. also have splashy e-procurement initiatives under way. In addition, these and other progressive institutions are planning an array of e-services, including fulfillment, cash management, accounting, electronic billing and lockbox.

Other financial institutions such as Visa U.S.A. also are counting on a B2B boom. The card association projects global card transaction volumes for online business-to-business purchases will grow to $7 trillion by 2004, up from $109 billion in 1999.

Rosy prediction aside, it's possible the business-to-business market is in for trouble just as it's taking off. To some observers, the most recent stock downturn was not only a historical inevitability, but also a sign of things to come.

So says journalist Edward Chancellor in Devil Takes The Hindmost: A History of Financial Speculation, his chronicle of investment crazes through the ages, from Holland's Tulip Mania in the 1630s to Great Britain's Railway Mania of 1845 to the day-trading mania of the late-1990s.

In each case, technological advances, coupled with changes in cultural tastes and attitudes, triggered a frenzy of business activity buoyed by nearly boundless economic optimism. And in each case, he says, the merry-go-round eventually came grinding to a halt, with dire financial consequences. More important, the parallels to our current infatuation with e-commerce are, well, history in the making.

"Whereas in the 1840s the speculative fervor was sustained by the crowds around the provincial exchanges, a century and a half later it was nourished on the Internet itself...The medium was no longer just the message, it was both the source and object of speculation," Chancellor writes.

What that implies, of course, is that the crunch now hitting online retailers eventually could afflict B2B companies. In other words, we haven't come to our senses regarding the real value of Internet companies, so much as transferred our faith to a different aspect of the New Economy.

Time to blow a new bubble.

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