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A Shot in the Arm for Commerce One

Commerce One, saying it expects second quarter revenues to be less than expected, signed a deal with SAP AG in which the German firm will make an additional investment in Commerce One of up to $225 million.

Pleasanton, Calif.-based Commerce One , citing "poor economic conditions," said it now expects revenues of approximately $100 million to $120 million in the quarter ending June 30. The Street had been expecting revenues in the vicinity of $160 million, making for a loss of 9 cents a share.

"We remain cautiously optimistic regarding the second half of the year," said Mark Hoffman, chairman and CEO. of the B2B e-commerce solutions provider.

The deal with SAP will give that company a 20 percent stake in Commerce One and give it the right to have a representative of SAP appointed to Commerce One's board of directors.

The SAP investment gave Commerce One's stock a shot in the arm, sending it up 74 cents or 17 percent in the early going today to $5. Its 52-week high is $84.12.

SAP agreed to limitations on its ability to transfer its shares of Commerce One common stock and on its ability to acquire more than 23 percent of the company's outstanding common stock or to attempt to acquire Commerce One in a transaction not approved by Commerce One's board of directors.

Commerce One earlier this week failed to win shareholder approval for a management proposal to turn it into a holding company and give it a potentially lucrative stake in Covisint, the online exchange for the auto industry. Hoffman sees it as a crucial move and he told Reuters he will put the issue in front of shareholders for yet a third time.

SAP had made an earlier investment in Commerce One and the companies together offer MarketSet, a joint solution from SAPMarkets and Commerce One for public and private exchanges.

"We have accomplished our first-level goals with the market leadership of MarketSet said Hasso Plattner, co-chairman, CEO and co-founder of SAP. Our increased investment in Commerce One reflects our commitment to a continued partnership."

Commerce One to date has never made any money, and last quarter it lost $228.5 million. The company lost $1.93 per share for all of last year.