Editor's note: A previous version of this story stated that webMethods lost, not earned, $5.5 million in the fiscal third quarter a year ago. This is been updated. We regret the error.
In the fiscal third quarter, revenues increased 1% to $53.1 million and license revenue fell from $22 million to $19.7 million. This is always troubling; after all, license revenue generally contributes to ongoing maintenance and service fees. And the company keeps posting losses; this time it was $5.7 million, or $0.10 per share in the fiscal third quarter. This compares to an earnings of $5.5 million, or $0.10 per share, in the same period a year ago. Going forward, management forecasts revenues of $49 million to $52 million in the fiscal fourth quarter; earnings are expected to range from a loss of $0.09 to a loss of $0.14 per share.
webMethods sells advanced software applications to help with data integration. The company focuses on Global 2000 customers, such as EchoStar
With several acquisitions, such as Cerebra and Infravio, management is targeting the SOA (service-oriented architecture) market with the launch of its latest product, Fabric 7. Basically, this uses Web-based approaches to help companies integrate their IT environments.
It does look like the product is robust. For example, webMethods has been getting customer wins against companies like Tibco Software
However, implementing SOA applications is a big undertaking for customers and, as a result, the sales cycle can be agonizing. It also does not help that webMethods is in the midst of restructuring its sales force.
Again, it's much of the same. The payoff for webMethods' SOA investments is probably a couple of quarters away -- if not more. And, for the most part, that should mean a stock price that remains listless.
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