The company develops software to help customers manage the growing volume of Word documents, spreadsheets, Web pages, SMS messages, emails, and other content rapidly clogging the corporate world.
As the fiscal first quarter showed, Vignette's not exactly revving up its growth. Overall revenue increased 2% to $47.6 million, and the company posted zero growth in license revenue.
Things were much better on the bottom line, though. Net income more than tripled to $4.8 million, or $0.16 per share. Earnings got a big boost from Vignette chopping sales & marketing expenses by 20%, to $13.9 million.
But the company can only cut so deep, and further cost reductions may ultimately hinder sales growth. On the conference call, management indicated that its sales force has undergone lots of turnover, and that the company needs to fill key positions. Keep in mind that it takes about nine months to get new salespeople up to full productivity.
In light of all this, it's no surprise that Vignette provided tepid guidance for Q2. The company expects revenue to range from $44 million to $49 million.
There's probably a floor on Vignette's stock price, however, thanks to recent buyout activity in its sector. IBM
Still, it's tough to predict when or if a buyout may arrive. In the meantime, Vignette is posting lackluster license revenue growth, and it faces challenges within its sales organization. As seen in yesterday's stock-price reaction, that's something investors don't like to see.
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