CRM software vendor stumbles in Q1; analyst expects more bad news from Silicon Valley companies through the summer
Posted May 14, 2002
It was eerily quiet at E.piphany's San Mateo, Calif., headquarters earlier this month. Too quiet. And then the news broke this week: The CRM software vendor just laid off 15 percent of its workforce, or around 100 people. The layoffs follow on the heels of a very tough quarter, whereby E.piphany missed estimates by 22 percent and posted $22 million in Q1 revenues.
Despite the doom and gloom, Michael Trigg, vice president of product management at E.piphany, talked up the company's strengths. And there's some real muscle. Epiphany's customer list boasts some of the biggest corporations in the U.S., including American Express, Home Depot, Proctor and Gamble, Microsoft, Cisco and even the National Football League. All tallied, Trigg says 35 of the Fortune 100 use E.piphany software.
E.piphany E.6 software is built on J2EE and boasts forward-looking analytics and a flexible architecture. Unlike rival Siebel's vertical approach, E.piphany pushes flexibility as a key selling point. Simply put, out-of-the-box software doesn't work in the enterprise space, according to Trigg. "Every company is different with different systems," he says, adding, "Flexibility is much more important."
The goal now is to expand geographically, as well as win the hearts of even more big companies. E.piphany hopes to grow international sales from 25 percent last quarter to 40 percent by the end of this year, mainly in Europe, South America and Japan. And in the U.S., the NFL has emerged as an advocate of E.piphany software. "It became clear to me that E.piphany's desktop tools were easy to use," says Bob O'Keefe, senior director of database marketing at NFL. "They were intuitive and easy to slice and dice. We're going to have multiple people [using the system] at the NFL, from our research department to individual clubs, and [they] will have various levels of sophistication."
Software sales average well under a million dollars, although some software sales are much bigger than others. For instance, Trigg says Epiphany's bad quarter was the result of a single customer choosing not to honor a signed software contract. "The deal still may go through," he says, declining to name the customer.
As for the layoffs, E.piphany's CEO Roger Siboni wrote in a memo: "One action we must take is to reduce our number of employees to a number that more closely matches our level of business." An E.piphany spokesperson says most of the cuts were excess sales people -- not customer support and product development staff -- made in order to reach profitability this year.
Moreover, E.piphany claims to have $300 million in cash in the bank. In addition to last week's layoffs, E.piphany reduced headcount by 150 workers last year. The market has responded favorably to the cost-cutting measures. The company's stock rose 43 cents to $5.46 per share on Monday and continued to rise slightly today.
Katherine Jones, managing director of enterprise applications at Aberdeen Group's Palo Alto, California offices, wasn't surprised to hear about layoffs at a Silicon Valley technology company. "Despite Greenspan's rosy optimism, I haven't seen anything in our part of the country to substantiate it," she says, adding that the once bustling, heavily commuted Silicon Valley has suddenly become a community of "empty buildings and a lot of parking spaces. There is still a recession here, and I expect cuts to continue throughout the summer."
Tom Kaneshige also writes for Line56.com
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