Shares of the business-to-business software maker slide nearly 35 percent after it issues a profit warning early in the day and then later delays its earnings results.
The stock ended the day down $2.17 to $4.05 on the Nasdaq Stock Market. It was a day of heavy trading sparked by two news releases totaling three paragraphs that left Wall Street analysts confused.
The business-to-business software company issued a curt news release early Wednesday saying it would fall short of estimates in the first quarter. PurchasePro said it expects "results to be below consensus estimates, primarily due to the deferred recognition of certain license revenue."
A PurchasePro spokesman said he could not comment and added that the company's earnings conference call after the closing bell Wednesday would clear things up. Later, the Las Vegas-based company said the earnings report and conference call would be delayed until Thursday morning.
Worries about the company's first-quarter earnings cut into its 49 percent gain last week and overshadowed the long-awaited appointment of a new chief financial officer Tuesday. It was quite a reversal of fortune for PurchasePro. Shares surged last week, albeit from lower levels, on optimism that the company would top estimates.
First Call's consensus for the company predicts earnings of 8 cents a share on revenue of $41 million. 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 reports earnings. "Obviously the press release took us by surprise," said Walravens, who noted that PurchasePro also deferred revenue in its third quarter.
Other analysts were not so forgiving. David Garrity, an analyst at Dresdner Kleinwort Wasserstein, cut his rating on PurchasePro to a "hold" from a "buy."
Garrity said PurchasePro's terse profit warning without any explanation raises credibility issues. He said it is likely that the company's high-profile partnership with AOL Time Warner is not delivering.
"We suspect that marketplaces being sold through AOL as a reseller have not been placed with final customers," Garrity said. "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."
After market close Tuesday, the company said it hired Richard Clemmer, former CFO of Quantum, as its new chief financial officer.
"Clemmer's experience as CFO of a multibillion-dollar technology company will be invaluable for PurchasePro," Walravens wrote in a report.
The profit warning is just the latest chapter in the PurchasePro saga. 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 had 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 the 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.
Staff Writer Larry Dignan contributed to this report.