Restructuring can be tricky in the rapidly changing tech sector, as online education software developer PLATO Learning
In the third-quarter results PLATO reported late last week, revenue plunged 18% to $19.2 million, largely because of the company's move from license fees to ongoing subscriptions. Following the success of companies like Salesforce.com
Still, that transition can be difficult, especially for a company's sales organization. That's been the case with firms like RightNow Technologies
As it shifts to a new revenue model, PLATO has been slashing its operating costs -- though not by enough to compensate for the drop in sales. Q3 saw a net loss of $1 million, or $0.04 per share, compared to a net loss of $1.8 million, or $0.08 per share in the year-ago period.
All the same, PLATO shows signs of progress. Orders for Web-based subscription products increased 59% to $11.1 million, and the company is revamping its sales force to tackle the new emphasis on subscriptions.
When might revenue stabilize? On the conference call, PLATO's management was not willing to promise anything. That may be a wise move, but it wasn't what Wall Street wanted to hear. As a result, it's probably a good bet that the company won't continue to make the grade with investors.
Further philosophical Foolishness: