LAS VEGAS, Feb. 5, 2001 (PRIMEZONE) -- PurchasePro (Nasdaq:PPRO) today said that an article published in Barron's February 5, 2001 edition that discussed the company was riddled with inaccuracies and innuendo.
The company said that although it is reluctant to give credence to the article with a response, it feels that its shareholders and analysts should be assured that statements made in the article are without factual basis.
The company said, "Barron's continues to publish inaccurate, unverified information about PurchasePro. These references began almost a year ago when the publication stated that the company would be out of cash in three quarters. PurchasePro, at the end of the most recent third quarter, had in excess of a hundred million dollars in cash and cash equivalents."
Charles E. Johnson Jr., chairman and chief executive officer of PurchasePro, pointed out that the article is "rife with inaccuracies." According to Johnson, "Writing an article of this magnitude without confirming the facts with the company violates a basic tenet of reporting. Had the author simply called company representatives, identified herself, and asked to check facts, she might have had the opportunity to write a fresh, credible and powerful story about a company that holds a significant leadership position in e-commerce. We were eager for an interview with Barron's, but wanted to wait until after our fourth quarter earnings announcement to do so."
In terms of inaccuracies, Johnson specifically cited the following:
* PurchasePro's financial statements are prepared in accordance with generally accepted accounting principles. The company discloses its financial condition in all material respects.
* PurchasePro has a chief financial officer. The company's CFO is James P. Clough. He has held the position since April 18, 2000. Clough is a former partner in the law firm Pillsbury Madison & Sutro LLP and is the second to serve as CFO since before the company went public in September 1999. Additionally, the company has had a single Chief Accounting Officer, Scott Miller, a former Arthur Andersen CPA, for the past three and a half years.
Barron's asserts that the company has an "inexperienced management team." This is not borne out by the facts. Johnson believes that the company has created a top-tier management team. Additionally, Johnson, President Chris Carton, and Executive Vice President Geoff Layne are each five-year veterans of an industry that is only five years old. Each has strong management experience and is recognized as a pioneer in e-commerce. Together with the senior management team, PurchasePro is positioned to continue its rapid growth. The team consists of the following individuals:
* Shawn McGhee, chief operating officer, served as president of Office Depot's North American Operations, where he was responsible for approximately 35,000 employees and managed a $4 billion supply chain.
* Jeff Anderson, senior vice president of sales and strategic development, a former vice president of Sprint Business, led Sprint's $2.5 billion strategic planning, business-to-business e-commerce, and distributor channel initiatives.
* Michael Kennedy, senior vice president and chief technology officer, held the same position at Starwood Hotels and served as a vice president at Best Western Hotels.
* Chris Benyo, senior vice president of marketing, spent 15 years in senior marketing and operations positions with such companies as BellSouth and Cable & Wireless.
* Dale Boeth, senior vice president of channel development, has more than 20 years in the technology industry and served as director of Sprint's e-business unit.
* Ed Kim, senior vice president of operations, is an MIT graduate and spent 11 years in the capital markets industry. He was most recently vice president of Prudential Securities technology investment banking group.
* Matthew Yost, vice president of strategic development, holds an MBA from the Kellogg School of Management and a BA from Wharton School of Business. Yost served as vice president of the Prudential-Volpe technology group.
Other inaccuracies in the Barron's profile include, but are not limited to, the following:
* Entrepreneur Steve Wynn did not pay off any notes for Johnson or PurchasePro. His total capital contribution to the company was insignificant, comprising $50,000. His equity position was repurchased in the first quarter of 1998.
* PurchasePro has not changed its business model. The company's focus has always been on developing multiple streams of recurring revenue. The addition of license revenue is a revenue stream the company is able to charge as a result of the instant liquidity in its interoperable platform. This new fee triggers an additional recurring revenue stream "hosting and maintenance" that equals almost 50% of the initial license fee on an annual basis. Other fees including subscription, transaction, and commerce services are expected to increase in value due to the evolution of the model. Average license revenue has increased every quarter, contrary to the reporter's assertion of competitive pricing pressure.
* In terms of metrics, usage on the PurchasePro global marketplace grew 52% last quarter. The company expects that growth will continue to accelerate.
* The company has no "handshake" deals and its agreements with its major partners are available for review at the Securities and Exchange Commission's website at http://www.sec.gov. Relationships with such partners remain strong. As is normal in the business cycle, certain agreements with partners have expired. This expiration does not mean companies have left the network or have ceased to do business with PurchasePro. Office Depot, for example, recently mailed more than 300,000 catalogs prominently featuring the PurchasePro e-commerce solution. The company's relationship with Sprint is ongoing.
* Additionally, Barron's failed to mention that the company has signed other significant partners including Gateway, Honeywell, Computer Associates, and BroadVision.
* AOL was not given four million warrants. AOL does have the opportunity to earn warrants as it meets certain revenue objectives. Additionally, PurchasePro and AOL have a revenue sharing agreement on monies received as a result of the partnership.
* Johnson did secure a line of credit using his PurchasePro stock as collateral. The amount used on the line of credit does not approach $100 million. In fact, Johnson has used more than $20 million from the credit line to acquire additional PurchasePro shares. Additionally, Johnson and several senior members of the management team continue to take no salary or other form of compensation from the company.
* Many of the non-financial metrics in the article have never been released by PurchasePro and are grossly inaccurate. PurchasePro does not release transaction metrics on a marketplace-by-marketplace basis because each is individually owned.
* PurchasePro is a browser-based software application. It is not a mere website, or simply an electronic "yellow pages" as described in the Barron's article. The product suite is the first to be fully browser-based and wireless in the B2B sector. This product enables companies of all sizes to eliminate the need to integrate, update, and incur large implementation costs when becoming a member of the company's global marketplace.
"Overall," Johnson pointed out, "Barron's apparent misunderstanding of PurchasePro's business model and strategy is evident by the depiction of the company's partnerships. PurchasePro's model is to overlap business databases through numerous partnerships. PurchasePro recognized early that partnerships and relationships will vary in their success rates. Speed to market is key. We created a strategy that wouldn't force the company to depend on any relationship for its success."
Johnson concluded by saying, "A final egregious error in the article is relative to the mention of a supposed 'Superbowl' party. If Barron's would have made its diligence calls, they would have learned that on January twenty-sixth, PurchasePro had an employee appreciation gathering to reward its employees for their continued loyalty and support.
"In conclusion, I think every PurchasePro marketplace owner, member and investor should take a personal affront to Barron's depiction of PurchasePro in this article. Their style discredits the thousands of members of our global marketplace who have made our solution part of their day-to-day operations, as well as our strategic partners who have chosen us as their e-commerce platform and B2B strategy."
Although the company will not comment on financial results prior to its earnings on February 12, Johnson invites Barron's readers to review the investor relations page of the company's website (www.purchasepro.com), including the "Frequently Asked Questions" pertaining to most of Barron's comments on the company's business and financial practices.
Johnson invited Barron's readers to access the company's earnings webcast and press release during the week of February 12 for a detailed analysis of its financial results and business prospects. Details relating to this call are forthcoming.
About PurchasePro
PurchasePro (Nasdaq:PPRO), a leader in business-to-business e-commerce, operates the PurchasePro global marketplace, encompassing more than 30,000 businesses and powering approximately 240 private-label marketplaces with its highly scalable, browser-based e-commerce engine.
PurchasePro's solutions enable businesses of all sizes to easily buy and sell products and services, and compete more effectively by enhancing sales opportunities, reducing procurement costs, and greatly increasing employee productivity. PurchasePro responds to the most common corporate needs: e-Procurement for corporate procurement, v-Distributor for online distributors, and e-MarketMaker for Internet market makers.
PurchasePro has developed strategic sales and marketing relationships with industry leaders including America Online, Computer Associates, Gateway, Hilton, Office Depot, and Sprint. The company provides extensive support and training programs. For information, call toll free at (888) 830-4600 or in Las Vegas at (702) 316-7000 or visit www.purchasepro.com.
NOTE TO EDITORS: PurchasePro is a service mark of PurchasePro.com, Inc. All other trademarks or registered trademarks are the property of their respective owners. This press release includes forward-looking statements which are subject to the "Safe Harbor" created by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements (which involve the company's plans, beliefs and goals, refer to estimates or use similar terms) involve certain risks and uncertainties, including the risks and uncertainties associated with rapidly changing technologies such as the Internet, the risks of technology development and the risks of competition that can cause actual results to differ materially from those in the forward looking statements. These forward-looking statements represent only the views of certain members of management and do not necessarily represent a consensus of all employees and managers within the company. Moreover, those forward-looking statements are based on limited information available to us now, which is subject to change. It should be clearly understood that the factors and perceptions on which these forward-looking statements are based are highly likely to change over time and that we have no current plan to update these statements. Actual results may differ substantially from what we say today and no one should assume at a later date that the forward-looking statements provided herein are still valid. They speak only as of today. For more information about these risks and uncertainties, see the SEC filings of PurchasePro, Inc., including the section entitled "Factors That May Affect Results" in its 10-K filing for the period ended December 31, 1999 and its 10-Q for the quarter ended September 30, 2000, which is available from the company on request and on the Internet at the SEC's Website, www.sec.gov.