PurchasePro Restructures AOL Deal; Ends Payments
Monday September 17 3:52 PM ET
NEW YORK (Reuters) - PurchasePro.com Inc. (Nasdaq:PPRO - news) said on Monday it has ceased payments to America Online Inc. (NYSE:AOL - news) under a restructured joint promotional deal as the business-to-business software maker struggles under continued U.S. economic pressures.
Under the new agreement, the companies' mutual promotional and payment obligations will cease, and future guaranteed payments of $20.7 million from PurchasePro to AOL will be canceled, PurchasePro said in a statement.
In addition, AOL will make a one-time payment to PurchasePro of $1.5 million for ``satisfaction of existing obligations,'' PurchasePro said.
AOL and PurchasePro got together last year, when AOL said it would use PurchasePro's exchange software to set up its own electronic trading exchange, called Netbusiness. At the time, AOL also said it would market and resell the software to businesses, including medium- and large-sized firms that wanted to set up their own marketplaces.
To date, the companies have jointly set up around 12 marketplaces, including deals with Hewlett-Packard Co. (NYSE:HWP - news) and Homestore.com.
The original deal called for PurchasePro to make up to $25 million in technology payments to AOL, plus a further $50 million for joint marketing.
But in an interview with Reuters last month, PurchasePro chief executive Richard Clemmer said the company could no longer afford to make the payments to AOL. He added that PurchasePro was is in talks with AOL to renegotiate the deal.
``We are pleased to have reached this agreement with AOL and we believe it will be of mutual benefit to both companies moving forward,'' Clemmer said in the statement on Monday.
As part of the new deal, AOL will have the option of continuing to use PurchasePro's software for its Netscape Netbusiness marketplace and the companies will continue to work together to identify new opportunities, PurchasePro said.
Shares of the one time high-flying PurchasePro fell 5.71 percent to 66 cents in afternoon trading on the Nasdaq stock market, way off their year high of $47.50. Shares of AOL were off 11.68 percent, or $4, at $30.39.
The Nasdaq, along with the New York Stock Exchange (news - web sites), opened Monday for the first time since the Sept. 11 terror attacks that destroyed the World Trade Center and crippled the financial heart of the United States.
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