Buying FILE ..
FileNet is a well managed high quality producer of integrated document management software products designed to manage information and enhance enterprise productivity. Revenues were up 40% for the first 6 months of 98 and 9% for the 3rd Q. Management remains confident in the long term growth of this industry and there is little doubt they are correct given the information revolution and the corroesponding need to manage information.
The Street has punished FILE severely for one disappointing quarter. Management explains it like this: "Certain significant new systems orders which were in our pipeline did not materialize as expected and add on revenue from existing customers declined in part as a result of our current transition to the new Panagon product line. We also believe the ongoing global economic crisis contributed to these delays and generally had a negative impact on software revenue this quarter,'' said Lee Roberts, president and CEO. ''As a result, our third quarter financial results were disappointing.''
This has created a buying opportunity for both long term holders and those traders interested in taking advantage of a nasty overcorrection.
FileNET Corporation
Contact and OFFICER Information:
Phone: (714) 966-3400
Fax: (714) 966-3490
Industry: Computer Networks
Sector: Technology
Employees: 1,490
Officers: T.J. Smith, Chmn.
L.D. Roberts, Pres./CEO
M.S. St. Clare, Sr. VP-Fin./CFO
R. Ercanbrack, VP
L.H. Kim, CAO/Contr.
YAHOO Information
Business Summary
FILE develops, markets and services a family of integrated document management software products designed to manage information and enhance enterprise productivity. For the six months ended 6/30/98, revenues rose 40% to $154 million. Net income totalled $7.2 million vs. a loss of $13.3 million. Revenues reflect an increase in the volume of product shipments. Net income also reflects lower cost of revenues as a percentage of revenues and the absence of a $6 million restructuring charge.
Recent Earnings Announcement
For the 3 months ended 09/30/98, revenues were 71,152; after tax earnings were -5,779. (preliminary; reported in thousands of dollars)
More from Market Guide: Highlights -Performance
Statistics at a Glance -- FILE Last Updated: Oct 16, 1998
Price and Volume
(updated Oct 16, 1998)
52-Week Low $3.688
Recent Price $5.00
52-Week High $32.875
Beta 1.53
Daily Volume (3-month avg) 842.5K
Share-Related Items
Market Capitalization $157.6M
Shares Outstanding 31.5M
Float 29.6M
Thursday October 15, 6:15 pm Eastern Time
Company Press Release
FileNET Announces Results for Third Quarter And Nine Months Ended Sept. 30, 1998
COSTA MESA, Calif.--(BUSINESS WIRE)--Oct. 15, 1998--FileNET Corporation (Nasdaq:FILE - news) today reported results for its third quarter ended September 30, 1998.
Revenue was $71.2 million, up 9 percent from $65.0 million for the third quarter of 1997. Net loss for the quarter was $5.8 million or 18 cents per diluted share, compared to net income of $1.9 million or 6 cents per diluted share for the third quarter of 1997.
For the nine months ended September 30, 1998, revenue was $225.1 million with net income of $1.4 million or 4 cents per diluted share. For the nine months ended September 30, 1997, revenue was $175.0 million with a loss of $7.1 million or 23 cents per diluted share before after-tax charges of $4.3 million for restructuring and other charges. The net loss for the nine months ended September 30, 1997 including restructuring and other after-tax charges was $11.4 million or 38 cents per diluted share.
As of September 30, 1998, FileNET's balance sheet included total cash and marketable securities of $82.3 million, total stockholders' equity of $130.2 million and no long-term debt.
The above results are materially the same as the estimated results reported by FileNET on October 7, 1998.
''Certain significant new systems orders which were in our pipeline did not materialize as expected and add on revenue from existing customers declined in part as a result of our current transition to the new Panagon product line. We also believe the ongoing global economic crisis contributed to these delays and generally had a negative impact on software revenue this quarter,'' said Lee Roberts, president and CEO. ''As a result, our third quarter financial results were disappointing.''
''We remain confident about the long-term growth of this market. Integrated document management (IDM) is a major solution to help manage the explosion of unstructured information. Further, we believe our efforts to transform the Company to being a total solutions provider is the right strategy for our business and customers. We will, however, aggressively adjust our business planning and operations to address our current financial results.''
This press release contains forward-looking statements regarding the Company's future performance. Those statements and the Company's future results of operations are subject to risks and uncertainties. Revenues and operating results for the period discussed in this release and prior periods may not be predictive of the Company's future financial results. For a detailed discussion of the risk factors and uncertainties that affect the Company's future results, please refer to ''Management's Discussion and Analysis of Financial Condition and Results of Operations - Certain Considerations'' in the Company's Annual Report for the year ended December 31, 1997; ''Business - Certain Considerations'' in the Company's Annual Report on Form 10-K for the year ended December 31, 1997; and the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998. Such risk factors and uncertainties include, but are not limited to, the timing of, and fluctuations in, orders for the Company's products; the mix of products and services sold by the Company; general conditions in the worldwide economy and the software/technology sector; timely development and introduction of new products to respond to customer demands; announcements of technological innovations, new products or product enhancements by the Company or its competitors; issues related to the Year 2000 problem; key management changes; changes in joint marketing and development programs; developments relating to patents or other intellectual property rights or disputes; and developments in the Company's relationships with its customers, distributors and suppliers. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties.
About FileNET
FileNET Corp. (www.FileNET.com) is a proven leader in delivering integrated document management (IDM) software to unleash the power of information for corporate and government organizations. FileNET's internet and client server solutions provide standards-based workflow, document imaging, electronic document management, and report management (COLD) software for managing information and enhancing productivity. Costa Mesa, Calif.-based FileNET markets its innovative products in more than 60 countries through global FileNET sales, professional services and support organizations, including its ValueNET(R) partner program of resellers, system integrators and application developers.
Note to Editors: FileNET and ValueNET are registered trademarks and Panagon is a trademark of FileNET Corp. All other named products mentioned in this release may have been identified by trademarks or registered trademarks of their respective holders.
FILENET CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
1998 1997 1998 1997
------------------- -------------------
Revenue:
Software $ 36,128 $ 34,684 $123,777 $ 87,841
Service 29,763 23,713 82,702 65,206
Hardware 5,261 6,614 18,654 21,976
-------- -------- -------- --------
Total revenue 71,152 65,011 225,133 175,023
-------- -------- -------- --------
Costs and expenses:
Cost of software revenue 4,850 4,058 12,801 10,223
Cost of service revenue 18,712 14,010 52,025 40,906
Cost of hardware revenue 3,043 5,063 9,641 15,230
Research and development 12,915 9,613 36,808 29,346
Selling, general and
administrative 40,877 30,624 115,030 91,411
Restructuring and other
costs 6,000
-------- -------- -------- --------
Total costs and expenses 80,397 63,368 226,305 193,116
-------- -------- -------- --------
Operating income (loss) (9,245) 1,643 (1,172) (18,093)
Other income, net 1,102 984 3,113 2,285
-------- -------- -------- --------
Income (loss) before income
taxes (8,143) 2,627 1,941 (15,808)
Provision (benefit) for
income taxes (2,364) 736 560 (4,425)
-------- -------- -------- --------
Net income (loss) $ (5,779) $ 1,891 $ 1,381 $(11,383)
======== ======== ======== ========
Earnings (loss) per share (1):
Basic $ (0.18) $ 0.06 $ 0.04 $ (0.38)
Diluted $ (0.18) $ 0.06 $ 0.04 $ (0.38)
Weighted average shares
outstanding:
Basic 31,526 30,512 30,843 30,331
Diluted 31,526 31,230 33,733 30,331
(1) Earnings (loss) per share for all periods presented have been
restated to reflect a two-for-one stock split in June 1998.
FILENET CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
1998 1997
------------- ------------
(Unaudited)
ASSETS
Current assets:
Cash and short-term marketable
securities $ 69,839 $ 63,944
Accounts receivable, net 62,149 61,283
Inventories 3,030 3,541
Prepaid expenses and other
current assets 9,096 8,309
Deferred income taxes 5,885 6,439
-------- --------
Total current assets 149,999 143,516
Property, net 37,452 27,587
Long-term marketable securities 12,454 7,826
Other assets 1,049 941
-------- --------
Total assets $200,954 $179,870
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 16,606 $ 15,003
Accrued and other current liabilities 53,676 45,626
-------- --------
Total current liabilities 70,282 60,629
Deferred income taxes 460 430
Stockholders' equity 130,212 118,811
-------- --------
Total liabilities and stockholders'
equity $200,954 $179,870
======== ========
--------------------------------------------------------------------------------
Contact:
FileNET Corp.
Mark St. Clare, 714/966-3577 (Chief Financial Officer)
mstclare@filenet.com
Colleen Edwards, 714/966-3218 (investor contact)
cedwards@filenet.com
Lynda Orban, 714/966-7141 (press contact)
lorban@filenet.com
or
Financial Relations Board
Lise Needham (general information), 415/986-1591
Nancy Hansen (investor contact), 415/986-1591
or
Shareholder communications:
Shareholder Direct(R), 888/444-FILE
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