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B2B results vary widely
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February 12, 2001: 6:29 p.m. ET
Open Markets misses by wide margin; PurchasePro exceeds estimates
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NEW YORK (CNNfn) - Business-to-business e-commerce firm Open Market Inc. reported a fourth-quarter operating loss that was much wider than Wall Street had expected Monday while rival PurchasePro.com surprised analysts by logging an operating profit.
Burlington, Mass.-based Open Market said its net loss for the quarter, excluding extraordinary charges, was $18.4 million, or 39 cents per share. Analysts had generally expected the company to post an operating loss of 20 cents per share, according to a survey conducted by First Call, a research firm that tracks corporate earnings estimates.
During the same period a year earlier, Open Market logged a loss of $3.8 million, or 9 cents per share, excluding one-time charges.
At $15.3 million, Open Market's fourth-quarter revenue fell 39.5 percent from the $25.3 million in revenue it reported in the fourth quarter of 1999.
Including charges related to the company's restructuring plan under which it cut 182 jobs, Open Market's net loss was $25.3 million, or 54 cents per share, compared with a net loss of $8.2 million, or 19 cents per share for the same period a year earlier.
In a teleconference with analysts Monday evening, Ed Durkin, Open Market's chief financial officer, characterized the quarter as an "anomalous period," considering the changes taking place internally as well as the softening U.S. economy.
"Like many companies, we felt the impact of the overall softness in the economy," Durkin said. "This, combined with our internal focus in early Q4 related to the restructuring ... negatively impacted our Q4 revenue performance."
Still, Durkin said the company expects revenue to rise in 2001, forecasting a 10 percent increase in the first quarter over the fourth quarter of 2000. He said he expects sequential revenue growth to accelerate to 20 percent starting in second quarter. 
Durkin said the company's gross margins in 2001 should be in the range of 62 percent-to-69 percent. He added that the company's current business plan for 2001 calls for it to achieve a positive cash flow by the third quarter and to turn an operating profit by the fourth quarter.
"Those are the goals we're striving for," he said.
Open Market (OMKT: Research, Estimates) shares fell 6 cents to $3.66 in Nasdaq trade ahead of the earnings results, which were released after the closing bell. They slid another 41 cents to $3.25 in after-hours trade.
The company's stock, which was one of the high fliers in the B2B Internet segment early last year, has fallen more than 94 percent from a 12-month high of $65.50.
Company executives urged analysts not to focus on 2000's results, asking them instead to look "below the surface" at the changes they have made in the year and how they position the company for 2001.
"We believe the story is in the prospective market opportunity we have as a consequence of our efforts in all of 2000," said Harland LaVigne, Open Market's newly minted chairman and chief executive.
"The restructuring we announced last October was substantially completed during the fourth quarter, and we have reduced our cost base," LaVigne said. "We also now have a complete senior management team that is singularly focused and committed to executing on our plan."
For all of 2000, Open Market's total revenue increased 7 percent to $88.9 million from $83 million in 1999. The company's net loss for the year was $37.8 million, or 83 cents per share, compared with $19.8 million, or 46 cents per share, in 1999.
PurchasePro.com beats
At the same time, PurchasePro.com reported operating positive cash earnings of $7.6 million, or 11 cents per share, excluding of non-cash charges and a one-time gain.
Analysts had generally expected PurchasePro.com to log a fourth-quarter operating loss of a penny per share.
PurchasePro's fourth-quarter revenue was $33.6 million, compared with $2.7 million in the same period a year earlier.
Executives at the Las Vegas-based company said continued growth of its strategic alliances contributed significantly to the company's fourth-quarter results. PurchasePro.com currently has partnered with companies including BroadVision (BVSN: Research, Estimates), Computer Associates (CA: Research, Estimates), Gateway (GTW: Research, Estimates) and AOL Time Warner (AOL: Research, Estimates), the parent company of CNNfn.
 "We think our fourth quarter results confirm the strength of our business model and validate, without qualification, our revenue model," Charles E. Johnson Jr., the company chairman and chief executive, said in a statement.
PurchasePro.com (PPRO: Research, Estimates) develops Web-based marketplaces that enable businesses to buy and sell products and services on the Internet.
After rising $1.41 to $15.91 on Nasdaq trade ahead of the earnings news, shares of PurchasePro.com rose another $1.59 to $17.50 in after-hours trade. 
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