Art Technology Drops on Questioned Receivables Sale

CRM software company Art Technology Group (Nasdaq: ARTG) extended its slide, losing 1 3/4 to 44 in the first few minutes of trading Thursday. The stock fell 9 9/16 to 45 3/4 Wednesday following reports that the company sold $9.6 million of accounts receivable at a discounted price, disclosing the sale only in a regulatory filing.

Analysts at Thomas Wiesel Partners and Dain Rauscher Wessels reportedly downgraded the stock after the filing with the U.S. Securities and Exchange Commission. The sale, which the company said took place in September, was not mentioned in the company’s third-quarter earnings report earlier this month nor on the accompanying conference call, reports said.

UBS Warburg, however, reportedly upgraded Art Technology, saying the transaction was a good move.

Art Technology said it sold the accounts to Silicon Valley Bank at a discount that will cost the company a net of between $30,000 and $100,000, depending on the timing of the collections. The Cambridge, Massachusetts-based company, which also paid an administrative fee of 0.375 percent, said it will manage the collection process on behalf of the bank.

In a statement issued after the close of trading, chief executive officer Jeet Singh defended the transaction, saying, “We believe the benefits of this arrangement support our historically conservative treasury management strategy. The agreement was offered to us at a financially attractive rate.”

According to chief financial officer Ann Brady, the receivables were derived from large, creditworthy customers. Brady said, “While the ability of these companies to pay is not in question, many large enterprises are historically slower paying customers, due to their size and more complex payment processes. No Internet company receivables were sold in this transaction.”

“We believe this sale was a sound financial transaction that allowed us to convert slower paying receivables to cash,” Brady said.

Company shares are down from a 52-week high of 126 7/8.

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