SCIENCE / TECHNOLOGY : FileNet Announces Affiliation With Dallas Firm, Reports Quarterly Loss

Compiled by David Olmos, Times staff writer

FileNet, a Costa Mesa technology firm, had some good news and bad news to report Monday.

The company said it has teamed up with a large Dallas-based mortgage loan-servicing company to jointly market FileNet’s electronic document filing systems to financial institutions and mortgage companies.

But the firm, which makes electronic document storage systems, also reported that it lost $2.2 million for the third quarter ended Sept. 30.

The company blamed the loss--its first quarterly deficit since early 1986--on increased competition in the market and on a $750,000 loss for excess inventory. FileNet officials said IBM’s recent entry into the market has caused some potential customers to delay purchase decisions while they evaluate IBM’s products.


“The market is becoming more competitive with IBM and Wang (Laboratories) marketing aggressively,” said Mark St. Clare, FileNet’s chief financial officer. “When a customer is making a $1-million to $1.5-million purchase, he is going to pause and see what IBM has to offer.”

FileNet’s loss of $2.2 million for the quarter ended Sept. 30 compares to earnings of $2.2 million for the corresponding quarter last year.

Revenue declined 13% to $12.6 million from $14.5 million a year ago.

The company said its third-quarter results were reduced by $750,000 because of excess inventory--the result of lower third-quarter product shipments and reduced business forecasts for the fourth quarter.

St. Clare said the inventory, while not obsolete at this time, may become so in the future if FileNet or its competitors bring out new products with superior technology.

Meanwhile, FileNet’s marketing deal with Lomas Information Systems, a subsidiary of Lomas Mortgage USA, is a “very significant” development for the firm, company spokesman Don Schnitter said.

Lomas “is an influence in the mortgage loan industry,” Schnitter added. “They have a lot of customers to whom they sell data-processing equipment, and they will have an advantage in selling our equipment to those places.”

The Lomas Information Systems unit markets computer software and services to the mortgage industry.


FileNet, one of the pioneers in the electronic image-processing industry, manufactures computerized systems that can copy images of documents and store those images in an optical disk “jukebox.” The document images can be viewed on a personal computer screen and modified without destroying the original data, thus eliminating much of the need to send paper documents back and forth.