Shareholder lawsuits pile up against PPro

Kevin Ferguson

Tuesday, May 1, 2001 | 11:08 a.m.

Filed or threatened lawsuits alleging fraud against Las Vegas-based PurchasePro have been piling up since the company announced Thursday it badly missed analysts earnings' estimates for the first quarter.

The lawsuits allege the company's chairman, Charles Johnson, Jr., and his executive team made numerous "positive" but false and misleading statements about the Internet business' financial condition in press releases over the past eight months, allegedly "artificially inflating" its stock.

Since Los Angeles-based law firm Weiss & Yourman filed its lawsuit Thursday afternoon, firms from Baltimore, New York and Las Vegas have also joined the fight against PurchasePro on behalf of various shareholders by filing or announcing plans to file lawsuits.

PurchasePro develops marketplaces for companies to buy and sell products on the Internet. The company reported a loss of 26 cents a share for the first quarter, ended March 31, far below analysts estimates of a profit of 8 cents per share.

PurchasePro spokesman Steve Stern declined to comment on any particulars of the lawsuits, and said he doesn't believe the company has been served with any of the lawsuits.

Stern also declined to comment on a Wall Street Journal article that reported that PurchasePro is a potential buyer of Zoho Corp., a struggling online hotel-goods provider based in Sunnyvale, Calif.

Zoho Corp. Chief Executive Chris Hjelm could not be reached for comment this morning.

The article reported that casino operator Harrah's Entertainment Inc. of Las Vegas holds a 10 percent stake in Zoho, a figure Harrah's spokesman Garry Thompson called "erroneous."

"We've never owned even close to 10 percent," Thompson said, noting that Harrah's has owned a "very small" percentage for about a year.

"Because of the technical problems Zoho has had, we have gone out and formed our own strategic-sourcing group internally," Thompson said, noting that the department is in charge of purchasing various items, such as linens and food, for the company's properties.

The Wall Street Journal reported that Zoho is down to 25 employees from a one-time high of about 200.

PurchasePro's Stern also disputed rumors that his company has been hit with any layoffs that warrant an announcement.

"Employees come and go and we continue to hire people," Stern said. "Our employment has stayed relatively stable. We have between 500 to 550 employees."