CRM Vendors Face 2Q Losses, Job Cuts

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Two major customer relationship management software vendors say they are still feeling the sting of a bad economy, faring worse financially in their second quarters than in the first and cutting more jobs to pare operating expenses.

San Mateo, CA-based E.piphany said it expects to report second-quarter revenue of $31 million, up from $24.5 million in the same quarter a year ago but down from $38.1 million in the first quarter of this year. E.piphany's second quarter ended June 30, and final numbers will be announced July 19.

Roger Siboni, E.piphany's president/CEO, blamed the financials on its international business.

"We believe that the North American market stabilized during the quarter, as revenue in that market declined only slightly from the first quarter," he said. "However, our international business, which is less mature and more influenced by larger deals, experienced a more significant sequential decline."

E.piphany expects to report a net loss of about $20 million in the second quarter but has targeted the fourth quarter of this year for reaching profitability. Siboni said that it would need about $50 million in revenue by then to be profitable.

E.piphany also said it plans more cost-containment efforts, including layoffs, which it will detail later this month. The company previously cut operating expenses 10 percent across the board after the first-quarter results were in, with most of the layoffs coming in professional services.

CRM vendor Xchange Inc., Boston, is reducing employee headcount 40 percent after losing about $7 million on $10.5 million in revenue in the second quarter, which ended June 30. The revenue shortfall resulted from continued weakness in the enterprise software market.

Andrew Frawley, president/CEO of Xchange, said, "The slowdown in IT spending and longer sales cycles impacted revenues for the quarter, as several deals expected to close by June 30 were delayed."

Xchange's second-quarter financials will be announced July 27.

In addition to cutting personnel, Frawley said, Xchange will continue to monitor costs and investments to try "to reach break-even by the fourth quarter of 2001."

In April, Xchange reported revenue of $15.8 million for the first quarter, up from $15.2 million for the year-ago quarter. It reported a net loss of $6.2 million, up from $1.3 million in the year-ago period but down slightly from its fourth quarter. Though pleased with its performance in the quarter, the company said it would cut 72 jobs to reach its break-even goal by year's end.

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