PurchasePro stock woes hurting sales effort, says CEO

Kevin Ferguson

Thursday, Aug. 30, 2001 | 11:16 a.m.

PurchasePro's low stock price is hurting the Las Vegas company's software sales, but the firm's chief executive is confident that the company will be generating positive cash flow by the end of the year.

"I recently found out just how difficult it is to complete (stock purchasing) transactions when your stock is below $1 as ours is," CEO Richard Clemmer said in a Wednesday conference call aimed at addressing concerns of retail investors.

One investor on the call asked Clemmer what extra steps PurchasePro's sales division has taken to assure potential clients that the struggling software company will exist nine months from now.

Clemmer's answer: "It has taken more effort from senior management because of the credibility issue. Our sales effort is an all-out effort."

PurchasePro executives have acknowledged the company's credibility has been damaged from sloppy bookkeeping that led to the company revising its first quarter earnings downward twice earlier this year.

Clemmer said the most important element of rebuilding the company is re-establishing PurchasePro's credibility with the investment community.

PurchasePro's stock is possibly heading toward delistment from the Nasdaq Stock Market.

Its shares have been trading below $1 for 24 of the past 26 days. Its shares were down 2 cents in mid-morning trading today at 66 cents per share.

Its shares were trading above $6 before a late-April earnings release, and the shares began to plunge during the following weeks.

Clemmer came on board as chief financial officer during the unfolding of these troubles, and was elevated to CEO shortly after the board ousted founder and then-CEO Charles "Junior" Johnson.

On Wednesday's conference call, Clemmer provided little new financial figures or guidance compared to those he gave Aug. 7, when the company reported a second quarter loss of 84 cents per share.

Clemmer said tech giant Hewlett-Packard has signed an agreement to sell its products and services on PurchasePro's e-commerce network. The two companies will jointly market the electronic network through interactive and educational newsletters and through an Internet advertising campaign.

Clemmer reiterated the company expects to generate $3 million to $8 million from sales through its new e-Source reverse auction software, which is expected to be the cornerstone of PurchasePro's revamped business plan.

Clemmer said 30 companies are using a pilot program of e-Source, but declined to say how many of those companies must become paid subscribers after the trial period in order for PurchasePro to meet its revenue goals.

He noted that 234 e-Source auctions have taken place since its May launch, generating $110 million worth of client sales at a cost-savings of $30 million to the businesses using the system.

Clemmer said the company is close to establishing a restructured partnership with it's biggest ally, America Online, the Internet unit of media giant AOL /Time Warner.

Under the partnership, PurchasePro was expected to pay AOL $20 million spread over the next three to four quarters, but because of PurchasePro's cash-strapped position, Clemmer said he has told AOL those payments will not be coming.

About $9 million of PurchasePro's $16.8 million second quarter revenue was generated through Netscape Netbusiness Marketplace, an electronic business exchange co-developed by AOL and PurchasePro that aims to channel mutual business traffic to each other's websites.

"AOL remains committed to the partnership as ever before," Clemmer said

An AOL spokesman couldn't be reached for comment.