FileNet Will Cut 100 Jobs After 3rd-Quarter Loss
Struggling to return to profitability, Costa Mesa-based software maker FileNet Corp. said it will cut 100 jobs and take a $2-million fourth-quarter charge as part of a corporate restructuring.
The layoffs will affect sales, marketing and international operations, company officials said Thursday. The document management software maker said the quarterly charge will include the cost of severance packages and the consolidation of functions and facilities.
Prior to the cuts, the company had more than 1,800 employees worldwide. About 800 people work in the firm’s Orange County offices.
“We’re focusing on making some modest changes,” said Lee Roberts, president and chief executive officer, who noted that 30 of the anticipated job cuts will come locally.
“We’ve grown so fast in the past [couple years], perhaps a little faster than we should have,” he said. “So we’re just trying to trim expenses and focus on stabilizing the company.”
In the last year, FileNet has hired more than 300 people, company officials said.
Analysts have praised the company for streamlining its product line and focusing on software that helps companies manage electronic data, such as text and graphics. Yet the company has had a rocky ride over the past several months.
In June, as the firm aggressively expanded its service business and added more salespeople, Roberts told analysts that FileNet’s revenue should double to $500 million by 2001.
But by October, the company announced that it would report a third-quarter loss of $5.8 million, dashing Wall Street’s expectations for a profitable period. FileNet staff blamed the loss on order delays, global economic turmoil and an under-performing sales force.
At the time, Roberts said that no layoffs were expected. When that news was announced, FileNet shares plummeted 57%, or $5.31 a share, to $9.39. The following day, shares rebounded to $6.63, up $2.06.
On Thursday, FileNet shares rose 3 cents to $8.75 in Nasdaq trading.
After the stock tumbled, at least three class-action lawsuits against FileNet have been filed by investors, all of whom bought shares from Jan. 18 to Oct. 7.
The lawsuits contend that FileNet misled investors about the strength of its product sales and the future growth of the document management market.
The suits also claim that FileNet did not accurately describe how its sales would be affected by year 2000 issues. The complaints have been filed by New York-based Weiss & Yourman, San Diego-based Milberg Weiss and Reinhardt & Anderson of St. Paul, Minn.
FileNet’s Roberts declined to comment on the suits.
