A month after losing its co-founder and chief executive officer, business-to-business (B2B) e-commerce company PurchasePro (Nasdaq: PPRO) said Monday that it is slashing its workforce by approximately 50 percent, as part of a new cost control program.
Along with reducing its workforce to less than 300 employees, PurchasePro’s new CEO, Richard L. Clemmer, said the company is also streamlining its senior management team. PurchasePro president Shawn McGhee has resigned, effective June 30th, the company said.
Shares of Las Vegas, Nevada-based PurchasePro fell more than 11 percent on the news to close at US$1.35 on Monday.
“Our most immediate task, with our vision and strategy in place, is clear: the rebuilding of PurchasePro’s credibility, and with it, the company’s financial stability,” Clemmer said.
PurchasePro creates online trading environments for small- and mid-sized companies and went public in September 1999.
As part of its announcement, PurchasePro also said it is creating a new consulting services group that will concentrate on integration services and custom development using its e-Source and e-Procurement products.
“We are embarking on a specific network services initiative” that will focus on the continued build-out of PurchasePro’s e-commerce network and related services, said Clemmer.
Although it targets the small- to mid-sized business market, PurchasePro achieved notable success in the hotel and motel vertical sectors, including such Las Vegas landmark resorts as the MGM Grand Hotel, the Bellagio and the Venetian.
Despite announcing an alliance with America Online (NYSE: AOL) earlier this year, PurchasePro has had a rocky few months. The company was reportedly sued in February by convicted money-launderer Russell Pike, who alleges that PurchasePro co-founders Charles E. Johnson, Jr. and Ranel Erickson launched PurchasePro based on a stolen business plan.
The company has also been hit with a spate of investor lawsuits, alleging that the company defrauded investors by making misleading statements.
Bigger Net Loss
PurchasePro is one of the few B2B marketplaces to achieve profitability. But in May, PurchasePro announced that its net loss for the first quarter 2001 was $14.3 million more than originally reported.
The company said that its net loss, including non-cash charges and amortization of equity-based compensation and goodwill, was $32.4 million for the quarter ended March 31st. It had previously reported a first-quarter loss of $18.1 million.
The revised earnings report came a day after Johnson, the company’s CEO and chairman of the board, left the company.