Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (11305)	5/3/2002 7:19:07 PM
From: stockman_scott	Read Replies (1) \| Respond to of 57684

Here's an update on Divine (DVIN)... [btw, it's not one i have a lot of confidence in -- the leader Flip Filipowski got lucky with Platinum and I don't think he'll be nearly as successful this time...IMO, Flip's a wheeler and dealer and not a builder of sustainable market leaders (like Tom Siebel).] Divine cuts 500 jobs, slashes costs to close on Viant merger May 3, 2002 By Darcy Evon i-street.com CHICAGO - Divine, Inc. (Nasdaq: DVIN), the Chicago-based enterprise software company, demonstrated that its growth-by-acquisition strategy is working in terms of skyrocketing revenue in the first quarter, although at a substantial burn rate that threatens to deplete its precious cash to a level that could jeopardize its pending merger with Viant. The jewel of the Viant acquisition is $80 million in cash that will go into the merged entity. In a conference call Wednesday, founder and CEO Andrew Filipowski and CFO Michael Cullinane acknowledged that divine must have $52 million in cash on hand at the time of closing as a requirement of the proposed Viant merger. divine's cash situation is precarious: "We burned about $60 million since the end of Q4 in line with expectations," said Cullinane, who added that divine had about $80 million on hand. divine expects to receive $10 million in cash from the acquisition of Canadian-based Delano in early June, and Filipowski said in the conference call that the recent salary reductions mandated for the May 31 and June 14 pay periods saved the company an estimated $10 million. It is obvious in consideration of all of these factors that divine would be shy of the required $52 million at the end of June. When contacted after the call to clarify the cash situation, Filipowski explained: "The bottom line of the answer is that we have let go of a significant number of people in the last couple of weeks [in the second quarter], about 500. We have taken other consolidation and integration costs out of the equation...in fact these expenses will be significantly lower in April than they were anytime in the first quarter. And these expenses are going to go down significantly in May and in June based on the transitions and various folks finishing their tour of duty in terms of transition periods." "We are way ahead of schedule in terms of our cash right at the moment having collected far more and spent far less than we had projected so we are probably $20 million ahead of where we thought we were going to be and of course we think there might be some adjustments in the other direction by the time the whole quarter is done but right up at the moment it looks very much that we are going to end up with a substantially higher amount of cash than we projected," he continued. Divine said in the conference call it had 3300 employees, down from 4000 at the beginning of the year. Total revenues in the first quarter soared to $146 million from $9.8 million in the year earlier, while net loss increased by about $5 million or $(0.16) cents a share compared to $(0.49) cents a share in the year earlier. The financials indicate that divine is shifting from services-based revenues to product-based revenues, substantially decreasing its cost of revenues. About 85 percent of divine's revenues were from services in 2001, compared to about 25 percent in 2002. Divine made it evident in the conference call that it is on a mission to secure cash. When asked what they would do if the Viant deal fell apart, Filipowski said they had a list of other acquisition targets that would also result in additional cash on divine's balance sheet.