Commerce One Q2 sales tumble, net loss narrows

By Reed Stevenson

SEATTLE: Commerce One Inc. on Wednesday posted a sharply narrower net loss even as revenues fell by 76 percent because of weak demand for the online marketplace software maker.

The Pleasonton, California-based company, 20 percent-owned by Germany's SAP AG, had a turbulent second quarter that witnessed the departure of its chief operating officer and chief financial officer and cut a third of its work force. The embattled maker of software for Internet-based commerce reported a net loss of $71.1 million, or 25 cents per share for the quarter ended June 30, compared to a loss of $2.07 billion, or $9.02 per share a year earlier.

"We're very cautious. People do have budgets, although they're quite a bit smaller, and they're careful about how they do spend that money," said Chief Executive Mark Hoffman. Commerce One, a former Wall Street darling and maker of software that links buyers and seller on the Internet, said it would seek shareholder approval to conduct a one-for-ten reverse stock split, which would reduce the number of shares outstanding and boost the face value of its shares.

The company has seen demand for its products dry up after the dot-com bubble burst and larger rivals such as software heavyweights Oracle Corp. and PeopleSoft Inc. entered the market with cheaper alternatives. As a result, Commerce One has reported a string of quarterly losses, repeatedly cut its outlook and slashed jobs in a bid to reduce costs.

Revenue in the second quarter tumbled to $27.8 million from $101.3 million a year earlier. Excluding noncash goodwill charges and other nonrecurring charges the company said it lost $38.4 million, or 13 cents a share, compared with a loss of $96.7 million, or 42 cents a share in the year-ago quarter.

That compared to Wall Street's forecast for a net loss of 14 cents per share before charges, according to a survey of seven analysts on research firm Thomson First Call. Commerce One shares have been stuck below $1 since early May and is well below its lofty lifetime closing high of $128.78.

Its poor financial position has led to rumors that SAP would ditch the e-commerce provider. SAP had dismissed such rumors in the past, but one of its co-chief executives was quoted in a magazine in June as saying that there was "theoretical discussion" whether the partnership was feasible in the long term.

Hoffman played down any overlap of Commerce One's business with SAP, calling the relationship a "coopetition." Commerce One shares closed at 65 cents just ahead of the results, up about 6 cents on the day and twice the lifetime low reached three weeks ago.