PurchasePro.com Cuts Half Its Staff, President QuitsPurchasePro.com Cuts Half Its Staff, President Quits

Problem-plagued E-commerce firm PurchasePro.com Inc. has reduced its staff by 50%, and president Shawn McGee has resigned. CEO Richard Clemmer says the cuts, which trim headcount to fewer than 300, and a new focus on selling software are necessary to set PurchasePro on track to turn a profit and rebuild its credibility, which has been shaken by a recent accounting debacle.

The company, dogged by revenue-recognition problems, says it will focus on building its software licensing business, which has been just one of the company's revenue sources, along with marketplace subscriptions and transaction, advertising, and hosting fees. The company says it's also creating a consulting division that will offer integration and custom development services.

PurchasePro also provided long-awaited financial guidance for the quarter ending June 30, estimating $18 million in revenue, compared with $16 million the quarter ended March 31. It was the first guidance update since the company reiterated in March a now out-of-reach goal of $225 million in revenue for the year.

But even as Clemmer, who succeeded Charles Johnson a month ago, tries to steer PurchasePro in the right direction, its controversial warrants-for-revenue deals with AOL Time Warner and other marketing partners continue to rear their heads. The Washington Post reported that AOL Time Warner, which owns a 5.7% equity stake in PurchasePro, has placed America Online exec Erik Keller on a six-week leave of absence while it investigates accounting matters "related to its partnership with financially troubled PurchasePro.com." Neither company would comment on the issue.