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Banyan earnings disappoint

Banyan falls short of expectations, leading industry observers to wonder how long the company can remain a viable player as companies like Microsoft focus on network-based software.

Good news is a stranger right now to networking software maker Banyan Systems (BNYN).

The supplier of networking software today reported a wider-than-expected second-quarter loss and plummeting revenues.

Banyan reported a loss of $13.7 million, or 79 cents a share, for the quarter ending June 30, compared with net profits of $186,000, or 1 cent a share, a year ago. Excluding a $9.7 million second-quarter restructuring charge, Banyan would have reported a net loss of roughly $4 million, or 23 cents a share.

A consensus analyst estimate from First Call pegged Banyan's loss at 20 cents per share. Shares of Banyan dipped in morning trading.

Revenues also dropped significantly year-to-year, falling to $17.1 million from $30.2 million a year ago.

Banyan officials, however, pointed to recent efforts to turn around the struggling company. Officials noted a 20 percent reduction in operating expenses, encouraging adoption of new software releases, and lower channel inventory levels as indicators that the company is headed in the right direction under new chief executive William Ferry.

And executives have previously stated in interviews that the internal goal for the company is to complete a quarter in the black before the end of the year.

But industry observers wonder how long Banyan can remain a viable player with companies like Microsoft focusing on network-based software. Banyan's network operating system, Vines, has built a reputation as a rock-solid platform. Although users have raved about Vines, company officials admit that Banyan's future lies in its StreetTalk directory and tools that ease migration to Microsoft's popular Windows NT operating system.

"While we are encouraged by our progress, there is much work to be done in order to stabilize Banyan's business performance and complete the rebuilding process," said Ferry in a statement.

Some irony accompanies Banyan's woes. Monoliths like Microsoft are currently trumpeting the "scalability" of their software, while Banyan's operating system and directory are part of some of the largest networks in use. But users are increasingly adding NT to Vines-based networks as Microsoft ramps up work on enterprise-strength features.