E.piphany Writes Off $2 Billion in One-time Losses for Q3; Revenues Up From Q2
E.piphany (Nasdaq: EPNY) Monday reported a net loss of nearly $2 billion triggered by one-time restructuring and acquisition charges for the third quarter of 2001.
Excluding the write-off, the Web-based CRM solutions provider lost twice as much per share in the quarter ended Sept. 30, 2001 as it had one year earlier. Revenues were also down 27 percent from last year's third quarter.
San Mateo, Calif.-based E.piphany recorded a restructuring charge of $32.4 million related to consolidation of facilities and employee severance costs. But the largest single quarterly loss was an amortization and goodwill write-off of over $1.9 billion, which the company attributed to costs and losses due to acquisitions made with stock over the past two years.
Like other companies in the CRM space reporting weak third quarters, E.piphany pinned its losses on the slow economy. "This action recognizes macro-economic conditions that have led to a reduction in market value in the stock that we paid for these acquisitions," said Kevin Yeaman, chief financial officer in a statement.
Including the amortization of goodwill and other non-recurring charges, E.piphany's net loss for the third quarter of 2001 was nearly $2 billion, or a whopping $(28.68) per share.
Without the non-recurring charges, the company's quarterly net loss was $15 million, or $(0.22) per share. The adjusted figure is a modest sequential improvement from second quarter's loss of $19.1 billion or $(0.28) per share but more than double the $7 million or $(0.11) per share lost one year earlier.
Revenues for third quarter paralleled the company's net losses, improving sequentially but decreasing year-to-year. The company reported third quarter 2001 revenues of $28.5 million, up 16 percent from $24.5 million in second quarter but down 27 percent from $39.1 million in the third quarter of 2000.
Following Monday's announcement, Credit Suisse First Boston announced it had substantially widened its 2002 loss expectation for E.piphany to 50 cents a share from 11 cents per share.
Despite the sobering forecast, E.piphany CFO Yeaman said the company has managed its finances well and will continue to do so by tightening its belt.
"In the third quarter, we raised services margins to more than 20 percent and reduced total costs and expenses by approximately 18 percent," said Yeaman. "In the fourth quarter, we will continue to focus on operating efficiency and cash management."
President and CEO Roger Siboni agreed that the company performed well for the quarter under the circumstances, landing several major customers including Hutchison 3G, Epson and Johnson & Johnson.
"E.piphany executed well through the continuing economic downturn. In challenging times like these, it is imperative that we focus on revenue as well as internal costs," said Siboni. "Our improvement in service margins and low cash burn are evidence of our successful execution."
--David Kent, destinationCRM.com