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Author: tmidiot Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 267  
Subject: As good as new Date: 3/28/2002 10:36 PM
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I finally got to talk to someone at the company about the GS BS. I wanted to know why they didn't throw us investors a line when some brokerage firm tries to torpedo our investment like that. I liked the explanation I got. Basically I was told that they have a business plan which they are following, and they don't respond to analyst's speculations. Why should they appear to be on the defensive, when all they have to do is keep on performing as they have been, and in the long run all the concerns, doubts, and misgivings will be answered not with words but with deeds.

Freemarkets has risen above all the one-time "gorillas" precisely because instead of being built on hype, they actually achieve results. We talked about the last few quarters which have not seen all that many "new" companies coming on board. In spite of this, they have been able to grow their revenues, because they have made the very prescient choice to cultivate existing subscribers, in a generally poor business climate where potential new clients are hard to come by. And when an existing big client like Raytheon renews, and an additional one of its divisions starts using Freemarkets, that is in reality the equivalent of adding a number of new customers, but with much less overhead since the relationship is already established.

The mistake that Goldman Sachs makes is to assume that only a new company is a new customer. A new division within the organization of an existing client, is every bit as much a new customer. And when the general business climate improves, to the point where companies that have been wanting to avail themselves of the service finally get some budget allocated to purchase it, then the new companies will start signing up.
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