App Integration Vendors Forecast Losses

Despite the perception that the software integration market is strong even in this down economy, leading application integration developers webMethods Inc., Vitria Technology Inc. and SeeBeyond Technology Corp. are anticipating heavy quarter-ending losses.

WebMethods, of Fairfax, Va., Thursday morning released preliminary results for its second fiscal quarter, which ended Sept. 30, that suggest losses will be between 14 cents and 16 cents per share on revenues of about $41 million. SeeBeyond also expects to report between $41 million and $42 million in revenue for the quarter ended Sept. 30 (its third fiscal quarter), but company officials said in a statement Wednesday that its loss would be 6 or 7 cents a share.

Vitria in a statement released on Wednesday said it will post third-quarter losses of between 11 cents and 13 cents per share, with revenues in the $30 million range.

In contrast, enterprise application integration software developer Tibco Software Inc. last month reported third-quarter adjusted income of $8.7 million, or 4 cents per share, on revenue of $75.2 million. The Palo Alto, Calif., companys sales were up from $67.2 million for the same period last year.

The chairman and CEO of webMethods, Phillip Merrick, attributed his companys disappointing financial projections to difficult macro-economic conditions compounded by the terrorist attacks of Sept. 11, which delayed customer spending at a critical point in the quarter.

In terms of guidance for the fourth quarter, Merrick said in a press release that as the country gets back to business and focuses on ways to streamline operations, many of webMethods anticipated deals should close during the December quarter.

Similarly, JoMei Chang, president and CEO of Vitria, of Sunnyvale, Calif., pointed to the tragic events of Sept. 11 as adversely affecting his companys sales pipeline. While not giving specific future guidance, Chang did say with that the combination of a broadly diversified customer base and a balance sheet with more than $170 million in unrestricted cash, the company is well-positioned for long-term growth.

SeeBeyond, of Monrovia, Calif., said its fourth-quarter sales will be flat at between $40 million and $42 million and fourth-quarter earnings will be about $1 million to $3 million, or 1 cent to 4 cents per share.

SeeBeyond will make its formal third-quarter earnings announcement on Oct. 22. WebMethods and Vitria are slated to announce final quarterly results Oct. 24.

Additional reporting by John S. McCright