FileNet Posts 35% Gain in Earnings, to $2.1 Million

FileNet Corp., a maker of computerized document storage systems, said Tuesday that its second-quarter earnings rose 35% to $2.1 million and revenue rose 34% to $27.3 million.

FileNet is a manufacturer of computer systems and software that copy, store and retrieve information from paper documents for storage on optical computer disks.

James W. Reynolds, an analyst with the Los Angeles investment firm Wedbush Morgan Securities, said FileNet's earnings were within expectations.

"Our customer base continues to expand as a broader acceptance of image processing develops worldwide," said Ted Smith, president and chief executive.

FileNet said that during the quarter it shipped 29 computer systems to 25 customers, including 18 new customers. The new customers included major companies in the banking, financial services, transportation and insurance industries, the company said.

"More important than the numbers here are the quality of the customers they are winning and the numbers of large accounts," analyst Reynolds said. "The technology is catching on in the marketplace, and FileNet has done a good job of managing its growth so far."

International Data Corp., a market research firm in Framingham, Mass., estimates that the image-processing business will be a $3.2-billion market by 1993.

However, analysts said that some earlier forecasts of the market's size have been overly optimistic.

Reynolds said FileNet's two largest competitors--International Business Machines Corp. and Wang Laboratories Inc.--have not yet made strong inroads into the market that FileNet pioneered in 1982.

Allen Strand, an analyst with Bateman Eichler Hill Richards in Los Angeles, estimated that FileNet's revenue will grow from $83.1 million in 1989 to $115 million in 1990 and that he expects net income to grow from $2.9 million to $8.5 million.

For the six months ended June 30, FileNet reported net income of $3.4 million on revenues of $51.1 million, in contrast with net income of $2 million on revenues of $37.9 million.

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