WebMethods Expects Higher Losses, Lower Revenues

WebMethods Inc. increased its expected losses and lowered projected revenues for the fiscal first quarter, due to the company’s failure to close several large deals.
WebMethods Inc. on Friday increased its expected losses and lowered projected revenues for the fiscal first quarter, due to the company's failure to close several large deals.

The Fairfax, Va., integration software company said revenues for the quarter ended June 30 were expected to fall between $40 million and $41 million, compared to $43.2 million in the same period a year ago. In April, WebMethods forecast revenues in the range of $51 million to $56 million.

Based on generally accepted accounting principles, the company expects to report a net loss of 22 cents to 25 cents per share, compared to a net loss of 13 cents a share a year ago.

On a pro forma basis, which excludes amortization of stock compensation and intangible assets and warrant charges, the company expected a net loss of 19 cents to 22 cents a share, compared to its previous forecast of seven cents to breakeven.

"We are disappointed in our revenue performance this quarter, even though like other companies in the enterprise software industry we historically have found our fiscal first quarter to be challenging," Phillip Merrick, chairman and chief executive of WebMethods, said in a statement.

The company had an "unusual number" of seven-figure deals that failed to close in the quarter, including one in excess of $5 million, Merrick said.

"Although we did close three million-dollar transactions in the quarter, lower closure rates of these large deals contributed significantly to our shortfall in the June 2004 quarter," Merrick said.

Nevertheless, Merrick said he remained "confident in our long-term outlook given the ongoing success our customers' are achieving in areas that are vital to their businesses."

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