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WebMethods Stock Falls On Revenue Warning

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WebMethods Inc.
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By Yuki Noguchi
Washington Post Staff Writer
Saturday, July 3, 2004; Page E02

Shares in WebMethods Inc. lost almost a third of their value yesterday after the Fairfax-based business software company warned it will fall far short of expected revenue for its first fiscal quarter ended June 30.

The eight-year-old company said it now expects revenue of $40 million to $41 million, compared with the $51 million to $56 million it had projected. After previously indicating it was close to breaking even, the company now anticipates a loss of 22 cents to 25 cents per share. It posted a loss of 13 cents per share in the same period last year.

WebMethods makes software that helps businesses pull internal data from various databases and display them on one screen. The company, one of the survivors of the dot-com collapse, has been profitable only in its fiscal fourth quarter ended March 31, 2003.

Its financial performance suffered largely from expected sales that did not materialize during the quarter, the company said.

"We had an unusual number of seven-figure opportunities in our pipeline that did not close, including one in excess of $5 million,'' chief executive Phillip Merrick said in a conference call yesterday with investors.

Merrick declined to discuss the reason for the delays in closing but said he did not expect the company to lose those contracts to competitors. "We feel that the business is still there," he said.

The company also expects to have less cash at the end of the quarter, about $146 million to $147 million, down from $155.9 million at the end of the previous quarter.

The company's stock closed yesterday at $5.63 a share, down $2.71 or 32 percent.

WebMethods has more than 1,100 business customers. It employs about 866 people, and it expanded last year by acquiring three companies. It competes with companies that are much larger and have a more established customer base, including International Business Machines Corp.


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