Software maintenance and services company Viasoft Inc warned Thursday that third-quarter revenue and earnings will be disappointing and said that it plans to restructure the company. Viasoft will cut 100 jobs, or about 20% of its total workforce, resulting in a $10m charge – to be taken during the fourth quarter – for severance costs and the write-down of certain long- lived assets and capitalized software. The restructuring is expected to save between $8.5m and $9.5m in annual costs.
Third-quarter revenues are estimated to be in the range of $25m to $25.8m, significantly lower than expected, with earnings per share of $0.01 to $0.03. Analysts surveyed by First Call were expecting $0.08 in earnings for the quarter. In the corresponding quarter a year ago, Viasoft posted a net loss of $4.1m on revenue of $26.8m. The revenue shortfall was primarily the result of lower-than-expected Y2K domestic license sales, the company says, as the market for its license tools continues to decline.
Thus, Viasoft is moving more toward the services side of its business, with a focus on e-business enablement. The company also increased investment in its consulting organization, including regionalizing services delivery and creating a dedicated services sales force. Services have so far been the smallest part of operations, as projected third-quarter numbers show license revenue of $10.5m-$10.8m and maintenance revenue of $8.1m-$8.3m, while services brought in just $6.4m-$6.7m. Cash reserves are said to be strong at $80m.
