Development tools company Forte Software issued another profit warning yesterday as its third quarter results fell victim to continuing sales problems, the Year 2000 crisis and the troubled Asian economic situation.
The Oakland, California company announced that revenues for the third fiscal quarter ended 31 December would fall short of expectations at between $17 million and $18 million. Consequently the company expects to report a loss of between $0.25 cents and $0.32 cents per share.
The company blamed the shortfall on delays in completing North American sales, IT departments focusing on the Year 2000 issue and a decline in Asian revenues, the latter also a factor cited by software firms such as Oracle and Sybase of late to explain away their own shortfalls.
Two US brokerage houses - Needham and Co. and Van Kasper & Co - immediately cut their recommendations on Forte stock from ?buy? to ?hold?. But other nvestors were pragmatic. "This is not bad, as in horrible," said one. "But it?s not what it should have been either. Something more like $20 million to $21 million would have been more on track. "It sounds to me like there is plenty of activity in the pipeline, but that it is just moving through a bit slower than expected or desired," he continued. "Given Forte's general posture of continuing to push aggressively on building up the sales force and maintaining high levels of development, it is almost predictable that this would lead to an earnings shortfall."
But this is just the latest poor quarter to face the tools company. Last year the company?s shares crashed on the release of its full year results despite a 110 per cent increase in revenue and profits of $7.2 million. At the time the company warned of significantly lower growth rates in the first and second quarters of the current year.
This was attributed to turnover in the US sales force, but would, insisted the company at the time, be in the past by the six month stage of the year.
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