FileNet Shares Fall 28% After News of 4th-Quarter Woes
COSTA MESA — Shares of FileNet Corp. plunged nearly 28% in heavy trading Friday after the company announced that it anticipates disappointing fourth-quarter results.
The Costa Mesa-based company’s stock tumbled $8.75 per share to close at $23 per share on the Nasdaq market. FileNet’s stock had traded as high as $67 per share in February.
FileNet makes computer systems used by companies to store documents and manage records electronically. Chief Executive Ted Smith said Thursday that FileNet’s fourth-quarter profit would drop to about 20 cents per share, compared with 32 cents per share last year. Smith attributed the slide to “a number of prospects and customers either delaying their orders or, in some cases, reducing the size of their orders.â€
Analysts said FileNet has also struggled to train its expanding sales force, and that there are emerging doubts about the company’s market.
“This market is facing competition from Internet-based technologies,†said Paul Dravis, an analyst at Robertson Stephens & Co. in San Francisco. “There are questions about this market in general, and FileNet’s ability to execute in it. They’re the leader in this business and should be growing faster.â€
For the year, FileNet expects a profit of about 82 cents per share, compared to 83 cents a share in 1995. Revenue for the year is expected to reach $269 million, up from $229 million in 1995. The company’s final earnings statement is to be released Feb. 6.
