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After delay, PurchasePro reports loss, misses estimates

    After delaying its earnings report following a terse profit warning, PurchasePro delivered its first-quarter earnings--and the news wasn't good. The company on Thursday missed estimates for the first quarter by a wide margin on disappointing sales.

    The business-to-business software company reported a loss excluding charges of $1.4 million, or 2 cents a share, on revenue of $29.8 million, down from revenue of $33.6 million in the fourth quarter. First Call's consensus for the company predicts earnings of 8 cents a share and revenue of $41 million.

    Including charges, the company lost $18.1 million, or 26 cents a share in the first quarter, which ended March 31. The company said it missed estimates because it deferred revenue from the "sale of several marketplaces."

    The disappointing earnings report capped a crazy 24 hours for the company. Shares of PurchasePro fell $2.22 to $4, or 32 percent, Wednesday after the company issued an 11th-hour profit warning. After the market close, PurchasePro followed up with an announcement that it would delay its earnings report until Thursday morning.

    The curt announcements--two press releases totaling three paragraphs--left Wall Street analysts confused.

    It was quite a reversal of fortune for PurchasePro. Shares had surged 49 percent last week, albeit from lower levels, on optimism that the Las Vegas-based company would top estimates.

    Analysts had expected the company to top estimates. Lehman Brothers analyst Patrick Walravens said in a Wednesday morning research note that he was anticipating $42 million in revenue and earnings of 10 cents per share, one of Wall Street's higher estimates.

    In a follow-up research note, Walravens said he was reserving further judgment until PurchasePro reported earnings. "Obviously the press release took us by surprise," he said, noting that the company also deferred revenue in its third quarter.

    Other analysts weren't so forgiving. David Garrity, an analyst at Dresdner Kleinwort Wasserstein, cut PurchasePro to a "hold" from a "buy."

    Garrity said PurchasePro's terse profit warning without any explanation raises credibility issues. He said that it's likely that the company's high-profile partnership with AOL Time Warner (NYSE: AOL) isn't delivering.

    "We suspect that marketplaces being sold through AOL as a reseller have not been placed with final customers," said Garrity. "If this is the case, we question why (PurchasePro) waited nearly a month after the close of the quarter to disclose this, especially given recent indications from the firm that it would make its numbers."

    New CFO
    The warning overshadowed the company's long-overdue appointment of a new chief financial officer. After market close Tuesday, the company hired Richard Clemmer, former CFO of Quantum.

    "Clemmer's experience as CFO of a multibillion-dollar technology company will be invaluable for PurchasePro," Walravens wrote in a report.

    The profit warning isn't the first time PurchasePro has had problems with Wall Street.

    In February, Barron's magazine trashed the stock and accused the company of lacking a CFO. Though the company had an acting CFO, James P. Clough, it has been public about its search for a more experienced candidate.

    PurchasePro countered by topping estimates for its fourth quarter and followed up by boosting its first-quarter outlook and expanding a partnership with AOL Time Warner. PurchasePro reported earnings of $7.6 million, or 11 cents a share, on sales of $33.6 million in the fourth quarter.

    ZDII's Larry Dignan contributed to this story.