Commerce One Issues Q3 Warning

E-commerce software maker Commerce One (Nasdaq: CMRC) late Monday lowered its outlook for the third quarter ended September 30th, saying “poor economic conditions” led to a loss for the period.

Commerce One, which makes software that powers online exchanges for businesses, said it expects revenue of US$80 million to $83 million, and a loss before non-operating charges of 24 to 25 cents per share. Analysts were reportedly looking for revenue of $90.6 million and a per-share loss of 23 cents.

Chief executive officer Mark Hoffman said Commerce One will continue to invest in its long-term plan “for delivering the premier e-commerce platform and achieving profitability.”

Slow Spending

On a conference call with analysts and investors, chief financial officer Peter Pervere said the company had previously thought revenue growth for the quarter would be “flat to very modest.”

However, “continued sluggishness in technology spending globally” and weak license revenues from Europe and Asia led to a decline, he said. In the second quarter, the company saw revenue of $101.3 million.

Even before the terrorist attacks on New York and Washington, companies had been scaling back their spending plans, particularly on technology.

“We saw flat budgets this year,” Forrester Research analyst Jennifer Chew told the E-Commerce Times. Forrester is polling companies to see whether they have cut back even further on spending, she said.

From Operator to Vendor

Pervere said Commerce One’s plan to shift to “enterprise” software sales and away from operating online marketplaces is meeting with success.

“We expect this focus on enterprise and on our core e-commerce platform will form a strong platform for us when more favorable economic conditions return,” he said.

That goal is being aided by Commerce One’s close relationship with German software maker SAP (NYSE: SAP), which holds a stake of more than 20 percent in Commerce One, as well as a seat on the company’s board.

“SAP’s representing something like 50 percent of Commerce One’s sales right now,” Chew said. “The SAP relationship is propping them up in terms of revenue and fiscal support.”

Buyout Candidate

Analysts have speculated that Commerce One could eventually be bought out by its German partner. Commerce One shares were at $2.55 in early trading Tuesday, down 26 cents on the day and well below their 52-week high of $75.75.

“That would be a natural outcome,” said Chew. “If Commerce One gets much cheaper, it would be a no-brainer.”

Commerce One plans to report results on October 17th.

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