Commerce One Restructures, Slashes 1,300 Positions

Company announces that amid declining revenues it cut almost half of its work force.

Commerce One Inc. announced after the close of the market Monday that amid declining revenues it cut almost half of its work force, or about 1,300 jobs.

The company, based in Pleasanton, Calif., currently employs about 2,800 people. Its consulting operations will be particularly hard hit.

Commerce Ones restructuring announcement fueled further speculation that SAP AG, of Waldorf, Germany, would take over the ailing e-marketplace company.

With a 20 percent stake in Commerce One, SAP has a long-standing relationship with the company that includes joint development of Commerce Ones MarketSet and Enterprise Buyer e-commerce platform offerings.

Officials from Commerce One declined to comment. SAP officials were not available to comment.

Some industry observers have speculated that Microsoft Corp. and PeopleSoft Inc. might be likely takeover candidates as well. Commerce One has a joint product development relationship with Microsoft, and PeopleSoft uses Commerce One for its e-marketplace offering.

Commerce One, like its competitor Ariba Inc., has been hit hard by the U.S. economic downturn over the last couple of quarters. As a result, the company laid off about 10 percent of its work force over the first and second quarters. Ariba, for its part, laid off about 700 employees during the first quarter of 2001.

Commerce Ones current reductions, which started Monday and will continue through the fourth quarter, will be achieved by eliminating about 700 professional services, marketing, sales and administrative staff positions.

Another 600 employees in service operations positions that are not directly related to products will also be eliminated by spinning off those units, officials said.

A preliminary earnings warning issued by Commerce One last week hinted that a restructuring might be under way. Company officials said then they expect to post software revenues around $20 million, down from $30 million posted the previous quarter and $69 million in software sales posted for the first quarter.

CEO Mark Hoffman said in a press release Monday that the company will continue to aggressively invest in its collaborative commerce product line – a move officials hope will pull the company out of its current slump.

Commerce One will announce its final third-quarter results Wednesday after the close of the market.