Pivotal Retrenches for 2003

Mid-market CRM software developer Pivotal Corp. today said that cost-cutting measures helped narrow its net loss in light of sluggish sales in the first quarter of fiscal 2003, ended Sept. 30, 2002.

The Vancouver-based company also noted in a conference call that it has added several new customers and has extended its alliance with Microsoft Inc., which the company said should lead to improved second quarter revenues.

The company posted a loss of $8.8 million, or 36 cents per share, in the quarter, compared with a loss of $22.6 million, or 94 cents per share, in the corresponding period last year. Net loss was reduced due to the company halving total operations costs from $32.3 million in the previous first quarter to just over $15 million in 2003.

Revenues in the quarter fell to $12.3 million from $16.1 million, Divesh Sisodraker, chief financial officer, said. Much of those declines came from Pivotal's software license sales, which dropped to $3.2 million from $6.1 million last year. Services and maintenance revenue of $9.1 million declined softly from $10.1 million last year.

Bo Manning, president and chief executive officer said he expects revenues at Pivotal to increase to about $13 million to $17 million in the second quarter, which will hoist Pivotal to the break-even point. "After three quarters of revenue growth, this quarter we are disappointed. We feel it is an anomaly. We are more dedicated than ever to our growth in the mid-market," he said.

The growth is expected to come from what Manning called key strategic initiatives. These initiatives include acquisitions, like its recent purchase of MarketFirst Software, a Mountainview, CA-based marketing automation provider. Manning said the deal is expected to be "immediately accretive to earnings."

Also, Manning said Pivotal plans to expand its product line. The company has recently launched its Pivotal Contact Center software and will soon rollout Pivotal 5, which is expected to be readily available late in the third quarter of 2003.

Pivotal's partnership with Microsoft to enhance its sales & marketing offerings in the healthcare and contact center markets, as well as Pivotal's commencement of operations in India will also lead to higher revenues and a more rapid move to profitability, Manning said.