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FileNet Has Record Revenue, Less Profit

July 20, 1999|P.J. HUFFSTUTTER | TIMES STAFF WRITER

Costa Mesa software maker FileNet Corp. said Monday that second-quarter profit fell 15% despite record revenue.

FileNet said net income for the three months fell to $3.9 million, or 12 cents a share, from $4.6 million, or 14 cents per share. The results beat Wall Street's expectations of 10 cents a share, according to analysts polled by Zacks Investment Research.

Analysts said the company, which makes Web-based software that manages corporate digital information, still is feeling a pinch from investing heavily last year in its sales and research staff. FileNet had a particularly rough third quarter last year as delayed orders, global economic turmoil and an under-performing sales force ate away at its bottom line.

Since then, the company has radically restructured and aggressively pursued new markets. Among other things, the company released an updated version of its Panagon software program, which is designed to help companies wade through mounds of data.

The company also said Monday it received an $8.7-million sales order--the biggest in its history--from Los Angeles-based Farmers Insurance Group of Companies.

The software deal, which has been in the works for six months, calls for Farmers to use FileNet's Panagon system for the insurer's new electronic claims processing system.

FileNet's second-quarter sales rose 7% to $86.1 million from $80.4 million a year earlier. The company attributed the increase to a 10% growth in revenue from its software line and a 24% boost in sales from its computer service unit.

FileNet officials said they remain "cautious" about the rest of the year, in part because of "the market uncertainty revolving around the unknown issues" related to year 2000 problems.

"We've closed 11 deals [this quarter]" and are doing a better job at improving the company's operating margin, said Chairman Lee Roberts.

FileNet announced the results after the stock market closed Monday. Earlier, its shares rose 25 cents, to $11.31, in Nasdaq trading.

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