Loudcloud May Not Get Enough Cash

Loudcloud Inc.’s auditor raised concern the Web site manager started by Netscape founder Marc Andreessen won’t be able to stay in business without getting cash to fund its operations.

Loudcloud this week agreed to sell its Web site management business to Electronic Data Systems Corp. for $63.5 million to focus on making software. Without that cash and $9 million it is expected to gain by purchasing Frontera Corp., Loudcloud may not be able to sustain operations, Ernst & Young said.

The Sunnyvale, Calif.-based company, which has never made a profit, spent $42 million this week to repurchase debt, depleting its cash, Ernst & Young said.

Both the sale to Electronic Data and the Frontera acquisition require the approval of a majority of Loudcloud’s shareholders.