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Software maker may cease to B2B

Business-to-business e-commerce software maker Metiom is overhauling its business and plans to announce next week whether it will be acquired or forced to file for Chapter 11.

Business-to-business e-commerce software maker Metiom is overhauling its business and plans to announce next week whether it will be acquired or forced to file for Chapter 11 bankruptcy protection.

Chief Executive Chris Wagner said Friday that the company laid off 100 workers last week, leaving about 20 employees to run the New York-based company.

"We are running the company with just our management team and are in discussions with our key engineers to make them contract workers in order to support our existing customers while we work through this," Wagner said. "We have an extremely loyal customer base that we are working very intensely to support."

Wagner said the company is talking to a possible buyer but may have to file for Chapter 11 if the purchase falls through to restructure the company around its existing electronic procurement customers.

Metiom, formerly called Intelisys Electronic Commerce, makes software for building public marketplaces that connect manufacturers and suppliers within a certain industry so they buy and sell goods online.

The company provides technology to Texas Instruments, Hasboro, WesternGeco and Indiana's state government e-marketplace, among others.

But Metiom, like its larger competitors Ariba and Commerce One, has been hit hard by the consolidation in the business-to-business software market, which has seen a slowdown in sales as widespread adoption of the public marketplace has failed to materialize.

The company is no newcomer to layoffs. In January it trimmed its staff by about 20 percent, bringing the work force to just under 300 people.

Privately held Metiom has had difficulty getting additional funding during the tough economic times. In addition, a failure to find more customers for its software has hurt the company, said Forrester Research analyst Laurie Orlov.

"They didn't have adequate traction and couldn't get additional funding from their investors," Orlov said. "We're seeing the consolidation of the e-procurement market, and firms like Metiom are in a tough spot because they are privately financed and they aren't bringing any money in, so their venture capital backers are fed up."

Calls to Forstmann Little, which holds a significant stake in Metiom, were not returned.

Although Wagner said his company's main goal is to continue to provide support to its customers, the demise of the company could hamper some of their business-to-business initiatives.

Stephen Hamill, general manager of U.S. Communities, the nationwide government purchasing alliance, speaks highly of Metiom's software. He said his company is in a wait-and-see mode with an e-procurement project began in February using Metiom's software.

"Because of other reasons, we have had to fall back from implementing a nationwide e-purchasing system for local governments," Hamill said. "However, we decided to start with a pilot program in Seattle, but if certain reductions in staff and financial problems at Metiom continue, and we don't start the project by July, we won't be able to move forward."

Even if his company can't work out an acquisition deal over the next few days, Wagner is committed to support his customers any way he can. "We will restructure under Chapter 11 and realign ourselves around our key e-procurement customers," he said.