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Informix stuns analysts

The No. 2 database software company takes Wall Street by surprise in announcing it expects a substantial loss for its first quarter.

Informix Software (IFMX) took Wall Street analysts by surprise today by announcing what it expects to be a substantial loss for its first quarter, sending its shares plummeting 34.5 percent.

The world's second-largest database software company said it will post revenues in the range of $130 million and $145 million for the quarter that ended March 30 based on preliminary results announced today. Informix posted $204 million in revenues in the same period one year ago.

Informix's stock fell to 9-29/32, down 5-7/32 from yesterday's close.

A consensus estimate from First Call forecasted first-quarter earnings of 12 cents per share.

Andrew Roskill, an analyst with Smith Barney, said the preliminary earnings are down by about $100 million from what Wall Street had expected. He revised his per-share earnings estimate for the quarter to a loss of 38 cents from an estimate of 11 cents in income per share. He said he had expected the company to post $256 million in revenues for the three months ended March 30.

Informix plans to file the actual results for the quarter by month's end.

"Ultimately, it comes down to managing the day-to-day business," Roskill said. "The magnitude of the shortfall was very substantial. Obviously, some changes need to be made."

The Menlo Park, California-based company attributed the expected decline in part to a slowdown in sales in all of its worldwide market regions, particularly in Europe.

More telling is a statement from CEO Phil White implying that the company may have been too aggressive in its bid to coax its customers toward new object-relational database technology and away from Informix's relational database software on Unix systems.

"We may have lost momentum as a result of sales and marketing overemphasis on emerging object-relational technology and the lack of corporate focus on our NT products and their price-performance benefits," said White in a statement.

Roskill said Informix managers focused too much attention as well as development, marketing, and sales resources to the object-relational database technology, considering the relatively small size of that emerging market. The company needs to refocus efforts on its core technology, he added.

Informix has been making a strong push to sell its Universal Server database software, introduced last December. Universal Server is an object-relational database that combines the company's existing relational database, Online Dynamic Server (ODS), with new multimedia and object technology obtained through the acquisition of Illustra Software.

Informix is attempting to cash in on a growing need among IS users for database servers that can store multimedia data, commonly found on the Web.

But based on the preliminary first-quarter results, the company may have pushed the new technology too hard. Last week, Malcolm Colton, the company's director of database marketing, told NEWS.COM that Informix plans to move its existing user base from ODS to Universal Server later this year, and will stop selling ODS in favor of the new database.

Other database software companies may be learning a marketing lesson at Informix's expense. Both Oracle and Sybase plan to launch object-relational database servers later this spring.