PurchasePro Misses Estimates
PurchasePro.com Inc. surprised investors today by reporting it had missed first-quarter estimates, contradicting statements the company made just last month that it was on track to meet projections.
The business-to-business E-commerce marketplace company reported $29.8 million in revenue, down from $33.6 million posted in the fourth quarter of 2000 and off from the $42 million it had anticipated. The company had projected a profit for the quarter, but instead reported an operating loss for the first quarter of $1.4 million, or $0.02 per share. PurchasePro, which had forecast 250% growth in revenue for the year, now says growth will be flat in the second quarter and gave no outlook for the rest of the year.
The company attributes the magnitude of the shortfall to revenue recognition issues, affecting $10 million in potential revenue. PurchasePro said that $4.1 million of the company's deals this quarter fell into the deferred revenue category, and another $3.7 million could not be recognized because of uncertainty about the customer's credit worthiness. Analysts hope that PurchasePro's newly appointed CFO, Richard Clemmer, former CFO at Quantum Corp., will enable the company to set better financial expectations.
Responding to concerns about its practice of giving away stock warrants to business partners such as AOL Time Warner, Gateway, and Office Depot, PurchasePro says it would no longer use warrants to compensate partners. PurchasePro caught heat from the investment community last month when it revealed it had repriced 3 million warrants it had issued to AOL at an exercise price of a penny. "Warrants were part of an early phase strategy," says Charles Johnson, CEO of PurchasePro. "Now that the business has matured, no new warrants will be issued and no existing warrants will be repriced."
The company's stock closed at $3.01 today, down $1.04 or 25.7%.
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