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Art Technology to cut staff

The software maker says that it will lay off 20 percent of its workers and that its second-quarter results will be below expectations.

Art Technology Group is laying off 20 percent of its staff as part of a companywide reorganization.

The company, which makes software for customer service applications and e-commerce, had already let go 12 percent of its staff in April.

Also, it announced that second-quarter results would be below expectations, citing "continued weakness in domestic (information technology) spending and a slowdown overseas."

"In the first quarter, many of our customers shut down their IT budgets and delayed purchasing decisions," CEO Jeet Singh said in a release. "We anticipated that we would begin to experience a gradual return to normalcy in the following quarters."

But in the second quarter, many customers' budgets were significantly smaller or continued to be restricted, Singh said. "As a result, despite continued good win rates among blue-chip customers, many of these customers are delaying larger purchases until market conditions improve."

Cambridge, Mass.-based ATG now expects revenue for the second quarter, which ended Saturday, to be between $34 million and $35 million, down from the $42.8 million it recorded in the first quarter. Analysts were looking for the company to post revenue of around $41.5 million, according to First Call.

The company will also record a $44 million charge related to the reductions announced Monday and the earlier job action. Excluding that charge and the related tax impact, ATG expects to report a loss of 17 cents to 19 cents per share for the second quarter. Including the charges, the company should post a loss of between 61 cents and 63 cents per share.

Analysts had been looking for the company to post a profit of 4 cents per share for the quarter, according to First Call consensus.

This is the second warning in as many quarters for the company. Shares lost half their value in April, after the company told investors to expect a loss instead of a profit for the first quarter. The stock has not really recovered since then, and closed Friday at $5.80, down from a 52-week high of $126.88.