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Liberate slashes revenue outlook

The interactive TV software developer lowers its first-quarter revenue outlook by almost half, saying losses will be higher than thought. But it still expects to make it into the black.

Interactive television software developer Liberate lowered its revenue outlook and increased pro forma loss estimates for its fiscal first quarter but said it maintained its expectations to achieve pro forma profitability.

The San Carlos, Calif.-based company said on Wednesday that it expects pro forma revenue in the first quarter ending Aug. 31 to be about $12 million to $14 million. Liberate previously issued guidance saying it would have revenue of around $20 million to $22 million. Its pro forma net loss will increase from 6 cents to 8 cents per share to 12 cents to 19 cents. Liberate will announce its financial results on Sept. 26.

Analysts were expecting a loss of 7 cents per share, according to a survey by First Call.

The software developer will take a restructuring charge of $2 million to $3 million as part of further streamlining of its organization. It estimated that it will spend $25 million in cash in its first quarter.

The new guidance reflects Liberate's acquisition of software developers Sigma Systems, which it announced in late July.

The company said the financial update was a reflection of lower capital expenditures in the cable and telecommunications industries.

"We are committed to achieving profitability and prudently using our significant cash reserves to build our business and drive shareholder value," CEO Mitchell Kertzman said in a statement. "We are realigning our business and leveraging our expanded product and service offerings to facilitate three critical areas of service growth for network operators: video, voice and data."

Liberate expects to achieve pro forma profitability in the second half of its fiscal year 2003, which is from June 1, 2002, through May 31, 2003. The company has cash and cash equivalents and short- and long-term investments of over $240 million.

Liberate shares were down 21 cents, or 10 percent, at $1.90 in after-hours trading.

The software developer gave revenue estimates for the next three quarters. For the second quarter ending Nov. 30, it expects pro forma revenue to be in the range of $17 million to $19 million. In the third quarter, pro forma revenue will be between $21 million to $24 million and in the fourth quarter, ending May 31, revenue will be around $25 million to $28 million.