Commerce One latest to be hit by B2B malaise

Commerce One Inc. yesterday joined the chorus of B2B software vendors warning about weak financial results, disclosing that an expected first-quarter loss will now likely be three times larger than previously predicted because of a shortfall in revenue.

The announcement by Pleasanton, Calif.-based Commerce One followed similar warnings that were issued this week by Ariba Inc., i2 Technologies Inc. and BroadVision Inc., all of which also develop business-to-business applications. All four vendors said they've been hit by a slowdown in purchases by their corporate users.

During a conference call that was broadcast via the Commerce One's Web site this morning, Mark Hoffman, the company's chairman and CEO, said users have been delaying software buying decisions because of the softening economy. As a result, he added, Commerce One's first-quarter sales were lower than expected in almost all regions.

"In some cases, customers are making smaller initial investments in technology projects and extending those projects over a longer period of time," Hoffman said. "In general, customers have become increasingly cautious in light of current economic conditions and more deliberative in their strategic and competitive evaluations of information technology."

Commerce One said it now expects to lose about US$21 million in the first quarter on revenue of US$170 million. The revenue figure would be up substantially from US$35 million in last year's first quarter, but analysts surveyed by Boston-based First Call/Thomson Financial had predicted sales of US$199 million and a loss of only about US$8 million in the just-ended period.

First-quarter sales of software licenses will likely total about US$70 million, with fees from services accounting for the rest of the revenue total, Commerce One said. The revenue shortfall is primarily due to weak license sales, Hoffman said, but he added that the company's services business also was below expectations during the quarter.

Commerce One didn't announce any workforce cutback plans, but Hoffman said the company is making "appropriate reductions and adjustments in costs." Asked specifically about head count during today's conference call, a Commerce One spokesman said executives "will continue to look at efficiencies throughout our organization."

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