E-commerce, Portal Vendors Struggle

ATG, BroadVision, Blue Martini see falling revenues in the most recent quarter.

Art Technology Group Inc. and chief rivals BroadVision Inc. and Blue Martini Software Inc. all continued to fight falling revenues. Reports issued this week put the trio in the red in the third quarter as the performance of all three companies showed the continuing weakness in the portal and e-commerce software space.

ATG came the closest to breaking even in the quarter, as total revenues fell from $30.5 million in Q3 2001 to $24.5 million last quarter. License revenues were down year-to-year from $13.4 million to $11.8 million. The Cambridge, Mass.-based company lost $3.1 million last quarter, down from a $9 million loss in last years third quarter.

ATG launched the latest version of its e-commerce and online customer relationship management platform, ATG 6 in the quarter and secured three deals worth more than $1 million each, company officials said.

BroadVision saw an even steeper falloff in revenues, from $48.7 million to $27.2 million. License revenues actually werent hardest hit, falling only 34 percent to $10.8 million, but the companys services business was cut in half. BroadVision, of Redwood City, Calif., posted a $67.6 million loss in the quarter, down from $432.5 million in last years third quarter.

Blue Martini, meanwhile, saw revenues fall from $11.7 million to $8.5 million. License revenues dropped from $3.4 million to $1.4 million. The companys net loss nearly doubled, though, to $28 million from $15 million in last years third quarter. Much of the losses were due to impairment charges taken because of the loss of value in the companys stock price.

"The entire enterprise software segment faces a very challenging sales environment, and we see this trend continuing for some time," said Monte Zweben, chairman and CEO of Blue Martini, in a statement.

Zweben said Blue Martini was in the process of reorganizing around vertical business units and reducing its workforce by an additional 20 percent.

The hosted e-commerce space seems to be doing just fine, though, as Digital River Inc. reported an increase in revenue, from $14 million to $18.9 million. The Minneapolis-based company posted a $98,000 profit after taking a $4.4 million loss in the third quarter last year.

"Our third quarter performance reflects the increasing acceptance of outsourcing, the continued growth in the Internet and the growing propensity to buy online," said Digital River CEO Joel Ronning, in a statement. "However, the slowdown in IT spending and the uncertain timing of a near-term economic recovery call for careful and prudent management of our business and future expectations. Given the varying market conditions, we are approaching the end of the year with guarded optimism."