Wednesday March 7 6:14 PM ET
CEO Says Commerce One at Risk From
Soft Economy
NEW YORK (Reuters) - The chief executive of
Commerce One Inc. (NasdaqNM:CMRC - news) said on
Wednesday that even though business remained strong in
the first quarter, the electronic commerce software vendor
was not immune to the economic pressure being felt by
rival software giants like Oracle Corp. (NasdaqNM:ORCL
- news).
The Pleasanton, Calif.-based company makes software
that enables businesses to set up online exchanges. Of the
big players in this market, so far only Oracle, last week,
warned that it would not meet its first-quarter
expectations because of the effects of the slowing U.S
economy.
But speaking at a conference in New York on Wednesday, Commerce One Chief
Executive Officer Mark Hoffman said that the firm also risked not meeting
analysts' estimates due to a slowdown in information technology spending.
``Look at Oracle, I don't think they can escape the macroeconomics us it's a little
bit easier,'' Hoffman said. ``But there are still risks, quite frankly, associated with
this quarter.''
Speaking at a conference hosted by Wall Street firm Merrill Lynch, Hoffman said
Commerce One still had to finalize more than 50 percent of its software license
deals for the first quarter.
Software licenses account for around 45 percent of the company's total revenues, he
said, with services making up another 45 percent and network revenues --
additional services offered on top of its online exchanges -- accounting for about
10 percent.
Hoffman said Europe remained a very strong region for Commerce One, largely due
to the company's partnership with German software giant SAP AG (NYSE:SAP -
news) (SAPG-p.DE), which accounted for 30 percent of Commerce One's software
license sales last quarter. International software sales accounted for 50 percent
overall.
Hoffman said he did not know if the SAP alliance would generate the same amount
of revenue in the first quarter, but looking ahead, he said the partnership could
potentially account for a very large chunk of Commerce One's overall sales.
``Forty percent of the global ERP (enterprise resource planning) customers are
owned by SAP,'' Hoffman said, adding that the two companies planned to push
their joint online exchange platform to those companies first.
Merrill Lynch's analyst Chris Shilakes said the SAP relationship was certainly a
buffer for Commerce One, but he cautioned that the first quarter would heavily
depend on how difficult the North American business was.
``It's (North America) still a significant portion of Commerce One's business but
it's just too early to make any predictions as to the effects on the first quarter,''
Shilakes said.
