Commerce One axes 40% of staff

CONTRA COSTA TIMES ^ | Fri, Oct. 31, 2003 | David Whelan

[Willie Green]

For education and discussion only. Not for commercial use.

Commerce One Inc. said it laid off 80 people, or about 40 percent of its staff, furloughed most of the rest for two weeks and hired a bank to explore the sale of its remaining assets.

Commerce One, once a hot Internet company worth over $14 billion, released the gloomy news in its quarterly report to investors Thursday.

Over the three-month period the Pleasanton company showed a loss of $24.4 million, or 77 cents a share. Those bottom line results were improved from the year before, when the company lost $36.3 million or $1.25 a share.

But revenue has slowed to a trickle. Software license revenue was $906,000, compared with $8.5 million a year ago. Services revenue was $4.8 million, down from $17.9 million.

Cost cutting is a priority right now. The 80 layoffs took place earlier this month, leaving it with 116 workers. When the layoffs were announced most of the remaining employees were told to take an unpaid vacation for two weeks.

In July the company settled all outstanding obligations with landlords, which had been draining the company's dwindling cash. As the company shrunk from 4,000 employees it abandoned office space, resulting in a lawsuit and unlawful detainer actions.

The company now has $11.9 million in cash on its books, the result of a $10 million infusion from Larkspur investment company Baystar Capital in July. Another quarterly loss like the recent one would cause a severe cash crunch.

The company has hired Broadview, a boutique investment bank, to help it raise money by selling assets like its software programs. In September, it sold its Xpress software for $600,000 to Computer Horizons Corp.

"We're doing what we can to keep things going," said Chuck Boynton, Commerce One's chief financial officer. Boynton said that there are no plans for a bankruptcy because of the nature of the software industry. "When business gets tough for a software company, you lay people off and restructure leases."

The stock closed Thursday at $2.39 a share, up 14 cents.

Reach David Whelan at 925-977-8568 or dwhelan@cctimes.com.

[Willie Green]

Another dotbomb on its deathbed.

[lelio]

But revenue has slowed to a trickle. Software license revenue was $906,000, compared with $8.5 million a year ago. Services revenue was $4.8 million, down from $17.9 million.

Its hard to believe this company was valued at $14B.

[Cicero]

Amazing. A $14 billion dollar company with 200 employees? Talk about tulip mania.

[HRC]

An amazing example of Clinton's bubble economy of the late 1990's. I remember running into people who worked here when their stock was high. They were walking on cloud 9.

[Revolting cat!]

This is adjusted for splits and at least one reverse split, but I remember when the price of the stock was over $300.

[lelio]

Talking about reverse splits, on CNBC this morning they mentioned that if exec approve it, Redback will do a SEVENTY THREE TO ONE reverse split. I did a spit take when I heard that one.