FileNet preliminary Q3 results worry investors

In an interview with KMWorld just last month, FileNet president and CEO Lee Roberts predicted 30% growth and 15% margins over the next year. Today, however, Roberts says the company will have to adjust its planning in the face of "disappointing" quarterly financial results. FileNet (Nasdaq: FILE) expects Q3 '98 revenue to be $71.2 million, a 9% increase over Q3 '97. A forecasted net loss of $5.8 million ($.18 per share) compares with a Q3 '97 net income of $1.9 million. Wall Street had expected FileNet to report $.14 per share in profit. Final results will be released next week.

"In addition to our sales force not reaching adequate levels of productivity, certain significant orders which were in our pipeline did not materialize as expected," said Roberts. The ongoing global financial situation contributed to the delays and generally negative impact on software revenue, he added.

Despite the disappointing results, Roberts remains confident about the document management and workflow markets and FileNet's leading position therein. So far Wall Street has yet to share Roberts' optimism. FileNet shares are down over 50% today, at one point bottoming out at its lowest level in seven years. FileNet is the seventh most active issue on the Nasdaq Stock Market today with 7.8 million shares traded by midday.