Software Maker FileNet Expects $5.8-Million Quarterly Loss
Blaming order delays, global economic turmoil and an underperforming sales force, Costa Mesa software maker FileNet Corp. said Wednesday that it expects to report a third-quarter loss of $5.8 million, or 18 cents a share, dashing Wall Street’s expectations for a profitable period.
Analysts had predicted the company would record a profit of 14 or 15 cents a share for the period ended Sept. 30, according to a survey by IBES International Inc. The company posted a profit of $1.9 million, or 6 cents a share, for the third quarter last year.
FileNet said revenue rose to $71.2 million from $65 million.
Executives believe the loss “was an aberration,” said Lee Roberts, president and chief executive. “We had a few big deals that we expected to be closed by the end of quarter. They weren’t, and it doesn’t take too many million-dollar-plus deals to make you miss your estimates.”
The company also was affected by the general slump of the Asian and Latin American markets, which make up about 4% of FileNet’s total revenues, said Roberts.
In June, Roberts had insisted that FileNet’s revenues should double to $500 million by 2001, as the firm aggressively expanded its service business and added more salespeople.
On Wednesday, Roberts said he still expects to achieve that goal--as long as the global market stays stable. No layoffs are expected, though FileNet said it will begin to look for ways to work more efficiently.
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 industry watchers remain concerned that the company could be hurt by corporate America rethinking internal spending habits.
“The whole [year 2000] issue, and the global economy situation in general, could hurt them,” said Robert Johnson, chief financial analyst for ABN AMRO Securities. “Clearly, imaging software is a nice thing to have. But it’s not like a payroll system, or something you’ve got to have and you’ve got to make sure works. They’re trying to do the right thing, but I think they’re a little more vulnerable in any downturn economic period.”
