From: Linda (firstname.lastname@example.org)
Date: Sat Nov 18 2000 - 23:30:05 PST
[Adam, you were asking about Commerce One. In view of scalability
concerns with their software, the insider selling is not especially
Commerce One's Stock Tumbles Despite the Company's Assurances
By Joe Bousquin
Senior Writer11/17/00 3:45 PM ET
Updated from 12:48 p.m. ET
Commerce One's (CMRC:Nasdaq - news) shares were off sharply Friday on
rumors the business-to-business software maker would have trouble
hitting Wall Street's fourth-quarter estimates.
The stock came back somewhat, but it still was down $7.50, or 14%,
at $45.81 recently. The concerns about the slowing sales also are
coming just after company executives sold shares.
Commerce One offered a strong-worded rebuttal to the rumors, saying
its business is on track for the current quarter and next year.
Analysts expect the company will post a fourth-quarter loss of 7 cents
a share and a profit of 2 cents a share next year, according to First
"While we've been made aware of certain rumors about the company's
fourth-quarter performance, they are complete fabrications, and we
categorically deny those rumors," said Andrew McCarthy, a Commerce One
spokesman. "We reiterate our outlook for the quarter and for 2001."
An internal memo that went out to the company's sales force reportedly
spurred those rumors, though McCarthy said he hadn't seen the memo. He
did say, however, that the company routinely issues material to its
sales force about expected goals.
"Every quarter, we send lots of motivational material to our sales
force to keep them pumped up during the quarter," McCarthy said.
Meanwhile, according to Federal Filings Newswires, Mark Hoffman,
Commerce One's chief executive, sold 300,000 shares of stock on
Oct. 30 and Oct. 31, during the "window" in which insiders are allowed
to trade after the company reports quarterly results. Commerce One
reported its third-quarter results on Oct. 19. The figure was three
times more than the 100,000 shares Commerce One's top executive sold
after the company announced its second-quarter results in July.
McCarthy said Hoffman had significant options to purchase more shares,
though he couldn't immediately say how many.
Jay Tenenbaum, the company's chief scientist and the brains behind
its software, sold 253,435 shares on Oct. 24 and 25, more than double
the 100,000 shares he sold on July 25, according to Federal Filings.
Chuck Donchess, Commerce One's chief strategy officer and most
often the company's public face, sold 140,000 shares on Oct. 24, less
than the 170,000 shares he sold on July 31.
McCarthy said the sales are part of routine steps executives take to
diversify their holdings. "This is part of normal disposal activity,"
Richard Williams, an analyst at Jefferies said Friday's events
substantiate his downgrade in October over concerns that the company's
sales were slowing.
"Their product, in our estimation, didn't scale well enough to satisfy
their first group of customers," said Williams. In other words,
Commerce One's software can't yet handle the millions of transactions
that companies and electronic marketplaces want to run simultaneously.
"Customers are requiring speed and numbers of transactions. And because
the software can't quite handle that yet, they're having to build out
the software to get there. We think they're not there yet, so they can't
sell to their next batch of customers until they're done."
McCarthy said Commerce One doesn't comment on analysts' commentary.
Since Williams' downgrade, Commerce One's stock has lost 26% of its
Other analysts defended the stock Friday.
"The Commerce One thing is completely ridiculous," said Gavin Mlinar,
an analyst at Sands Brothers who rates Commerce One a strong buy.
"People are just looking to point out anything negative about these
companies. There are a lot more shorts jumping in that's fueling the
speculation." (His firm hasn't performed underwriting for the company.)
Short sellers are investors who try to benefit from a drop in a stock's
price. And on Friday, those investors were the ones making money on
"Ask a CMGI shareholder what CMGI stands for, and she might
say Crummy Miserable Godforsaken Internet." -- Red Herring
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