PurchasePro takes loss on sale of unit
For $2.5 million in cash, the e-business software maker is selling a business unit it picked up through a $14.5 million acquisition.
PurchasePro, which has been struggling since it exposed accounting problems last year, said the sale of the unit, effective this week, provides much-needed capital.
"The cash provided by this transaction will allow PurchasePro additional runway needed to gain sales traction in this very difficult market and economic environment," PurchasePro Chief Executive Richard Clemmer said in a statement.
The company has suffered as businesses have slowed their investments in e-business software. And last week, PurchasePro said it is under investigation by the Securities and Exchange Commission for a past partnership with media conglomerate AOL Time Warner.
The Las Vegas-based PurchasePro formed the back-end applications business unit with software it gained in its 2001 acquisition of Stratton Warren. It bought the software developer for $14.5 million, including $5.5 million in cash and $9 million in stock.
PurchasePro intended to tie Stratton Warren's purchasing and inventory software to its own online marketplace for hotel and other business supplies. The software is used by more than 160 hospitality companies, such as entertainment, hotel and gaming company MGM Mirage and the Mandalay Bay Group Resort. PurchasePro hoped such a move would boost sales transactions on its e-marketplace at a time when businesses were experimenting with the buying supplies in cyberspace. Many e-marketplaces, including PurchasePro's, have failed to take off as anticipated.
As part of the sale, PurchasePro and Inter-American Data, which sells mainframe-based property management software to hotels, casinos and resorts, have agreed to keep their applications compatible.
PurchasePro shares, which in December 1999 hit an all-time high of nearly $400, closed Thursday at 31 cents per share.