Vignette Plummets on Outlook, Downgrades

Vignette Corp. (Nasdaq: VIGN) sank more than 40 percent in the first half hour of trading Thursday, losing 5.38 to 7.12 after the e-commerce software maker lowered its projections for the coming year and said it will consolidate operations.

Vignette said revenue for the fourth quarter totaled US$123.9 million, up 203 percent from a year earlier and 12 percent ahead of the third quarter. The company said it had a "core operating loss" of $6.3 million, or breakeven per share, but posted a net loss of $138.7 million, or 60 cents per share, compared with a loss of $5.63 million, or 3 cents, a year earlier.

"While Vignette's long-term outlook and market position are strong, recent uncertainty surrounding the overall [information technology] spending environment and customer hesitancy to make large capital expenditures has led Vignette to reduce its financial guidance for fiscal year 2001," the company said.

Vignette said it expects revenue of $100 million for the first quarter, with core earnings of a penny per share, and revenue of $500 million and core earnings of 9 cents per share for the year as a whole.

To deal with the slowdown, the company said it will lay off an unspecified number of workers and consolidate operations, resulting in a charge of $45 million to $55 million to first-quarter results. The cost cuts will save about $100 million over the next four quarters, Vignette said.

Analysts at Salomon Smith Barney and Deutsche Banc Alex. Brown reportedly downgraded Vignette following the news.

Vignette said it added 97 customers in the quarter, bringing its total to 1,248 users. The company also announced new or expanded alliances with Accenture, IBM (NYSE: IBM) Global Services, Sapient, Sun Microsystems, PricewaterhouseCoopers and Computer Sciences Corp.