PurchasePro cuts 103 jobs

Kevin Ferguson

Tuesday, June 5, 2001 | 11:09 a.m.

Las Vegas-based PurchasePro appointed Richard Clemmer as chief executive officer this morning.

The appointment, which was expected, fills a vacancy created by last month's abrupt departure of the software firm's founder Charles "Junior" Johnson.

Clemmer, 49, a former chief financial officer of Quantum Corp., joined PurchasePro last month as CFO. Prior to Quantum, he was senior vice president and CFO of Texas Instruments' Semiconductor Group.

The company said Clemmer will remain PurchasePro's acting CFO.

He knew it couldn't be good news.

It was a gut feeling that Ron Waits -- a three-year employee of the Las Vegas-based company PurchasePro -- had when his boss came to his cubicle one day last month and told him to follow him to another building.

"He said 'don't bring anything,' " recalled Waits, who said he was the 68th employee hired by the once-high-flying software firm that eventually grew to a staff of about 600 -- making it the largest technology company in Las Vegas.

When Waits, a 48-year-old Unix administrator, entered the room, his fears were confirmed.

He saw co-workers gripping a packet that contained a three-page termination letter, a severance package and a book titled, "Surviving a Layoff: Downsizing, RIF, Reengineering Plant Closing."

"It was kind of cold, a lot like an assembly line," he said. "They said I'm terminated and have to leave right now."

That was May 3, the end of four days of firings that saw 57 people lose their jobs.

And last Thursday, the hammer fell again. This time there were 46 casualties, said company spokesman Steve Stern, who added the layoffs were in all departments.

"(The 103 layoffs were) part of repurposing of the company, which reflects the current economic environment," Stern said, noting that it brings the firm's head count to 525.

Layoffs during the national economic downturn have not been unusual.

But Waits said the PurchasePro layoffs were unexpected because of weekly pep talks in the past few months by executive Mike Kennedy to his techies in which he said the company was going strong.

Still, many staffers knew the picture wasn't quite so rosy, Waits and another ex-employee said.

The company in April started to scale back on some employee perks, like Friday's "PizzaPro" in which the company treated employees to pizza on payday. Cases of Krispy Kreme doughnuts were also trucked in less frequently, Waits said.

"It was a great place to work. We ate doughnuts while we worked on our computers," Waits said. "The benefits and the pay was great, too. But the turnover was very high, and most of it was not voluntary."

By the end of April, financial problems really came to light, when the company warned of a revenue shortfall due to revenue-recognition problems in deals with strategic partners.

These accounting issues, including an alleged misrepresentation of PurchasePro's finances, led to an avalanche of lawsuits by disgruntled investors against the company and its founder and then-chairman/chief executive Charles "Junior" Johnson.

Johnson resigned or was fired by the board soon after.

The day after Johnson left, the company had to revise its first quarter earnings downward, which was something it had to do again days later.

The company reported a net loss of 26 cents a share, on revenues of $29.8 million in late April. But a few revisions later, PurchasePro settled on a loss of 49 cents a share on revenue of $16 million.

Last year, PurchasePro was considered one of the darlings of the white-hot technology sector known as business-to-business (B2B) e-commerce.

Technology companies in that sector aim to assist companies in streamlining their purchasing process by bringing together buyers and sellers in marketplaces on the Internet.

PurchasePro shares rose 36 cents to close Monday at $2.18 and traded this morning at $2.35. That's down significantly from the stock's 52-week high of $47.75 reached on Sept. 29.

The shares have been trading below $5 since April 25, the day the company warned of an earnings shortfall.

This is a difficult time for Nevada techies to be unemployed with the state's unemployment rate at a 53-month high of 4.9 percent.

Many tech companies in the valley say they have received resumes from ex-PurchasePro staffers, but unfortunately, they are now stabilizing their employment levels or downsizing as well, executives of various companies say.

Jet Mitchell, a Las Vegas recruiter for RHI Consulting, has stopped accepting clients for Internet website-based jobs, instead focusing on hard-to-find information technology positions.

"It's not because (web programmers) are not out there. In fact, they're flooding the market," she said. "Unfortunately, I think a lot of these web-based programmers are going to be forced to leave the market to find a job."