Portal Software Sinks on Outlook

Portal Software (Nasdaq: PRSF) plunged US$3.07 to $6.21 in morning trading Monday, after the business software maker said it expects lower revenue and a bigger loss for the quarter ended April 30th.

Portal, based in Cupertino, California, also said it will cut jobs and take other steps to reduce costs as a slow economy causes customers to put off software purchases.

Revenue for the quarter will likely total $42 million to $44 million, below previous projections, with a pro forma loss of 19 to 22 cents per share, Portal said. Analysts were looking for a profit of a penny per share.

CIBC World Markets reportedly downgraded Portal to buy from strong buy after the news.

Pro forma figures exclude amortization of goodwill and developed technology related to the acquisition last November of Solution42.

"While we anticipated a slowdown in economic spending by technology and communications companies, the overall global downturn was greater than we had anticipated," Portal Software chief executive officer John Little said, echoing comments made by other software company heads.

"We will be taking aggressive cost-cutting measures to reduce our expenses throughout the company in an effort to meet our business objectives in the short and long term," said Little.

The company said it will cut expenses by 20 to 25 percent this quarter through a combination of job cuts, facilities consolidations and write-offs. A charge for the restructuring actions will be included in results for the quarter ending July 31st, Portal said.

Portal, which sells its products to companies including AOL Time Warner, Qwest Communications and Sprint, said it plans to report results on May 17th. The company employs about 1,500 people at more than 40 offices around the world.