The president and chief executive officer of Harbinger Corp. defended his company's viability after the market reacted negatively to last week's announcement that Peregrine Systems would buy the Atlanta company.

Harbinger, formed in 1983, built its reputation on electronic data interchange, a pre-Internet method of exchanging purchase-related documents such as orders or invoices between companies.

In a conference call on Thursday, the day after the deal was announced, CEO James M. Travers emphasized Harbinger's technological advancements.

"There are a lot of myths in this industry, and clearly we are not arguing that EDI is not in transition and that Harbinger historically has been very much an EDI-type of company," he said. "But at the end of the day, EDI is another way of doing electronic commerce, just like XML."

The deal announcement nonetheless spurred a selloff of shares of Peregrine, a San Diego-based provider of electronic procurement software. The stock plummeted from a closing price of $58 a share on April 5, the day the deal was announced, to $36.75 on April 6.

Many analysts chalked up the stock drop to the misperception that Peregrine is purchasing a slow-growth business.

Bob Fontana, an analyst with Wachovia Securities Inc. of Charlotte, N.C., said many analysts incorrectly view the company as "old school." Over the past two years, Mr. Fontana said, Harbinger has embraced Internet technologies and now 54% of its customers are using newer Internet-based methods of exchanging documents, such as extensible markup language, or XML.

With Peregrine's procurement services and Harbinger's electronic delivery software, the combined company could enable business customers to create marketplaces for trading online. Peregrine expects that the merger would enable the firm to compete with other major business-to-business marketplace providers, Steve Gardner, Peregrine's president and chief executive officer, said in the call.

Mr. Fontana of Wachovia said Harbinger's EDI background should be viewed as an advantage for the merged company.

"Harbinger is almost technologically agnostic. They are not married to one type" of e-commerce method, he said. "It helps that they have an EDI background, because most business-to-business commerce today is still based on EDI, but … [Harbinger] certainly has the capabilities to use Web technologies."

The stock-for-stock exchange is valued at $2.1 billion on the basis of Peregrine's closing price on April 5. Peregrine expects to issue about 36 million shares in exchange for all of Harbinger's outstanding equity securities. The deal is expected to close by the end of September.

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