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NetManage's star is falling

Once ranked the fastest-growing company in Silicon Valley, the intranets software firm is beginning to see its fortunes change.

NetManage (NETM), which topped a recent list of the 50 fastest-growing Silicon Valley companies, saw its stock fall 14.5 percent today after announcing that it expects a drop in fourth-quarter revenues and profits.

NetManage estimated a quarterly loss of $5 million to $7 million, excluding about $15 million in write-offs for acquisitions. Last year, the company reported net profits of $3.3 million, or 8 cents a share, during the same period.

The write-offs include $10 million for acquiring DoubleAgent Technology from Applicom Industries, $3.2 million for gateway and mail server technology from U.S. Computer, and $1.5 million for discontinued product lines.

Revenues for the intranets software maker are expected to fall about 37 percent to $20 million for the fourth quarter, down from $31.2 million a year ago.

That stands in stark contrast to NetManage's industry status in September, when it was ranked first in the second annual Silicon Valley Technology Fast 50 awards. The company won that recognition after having seen its revenues jump to $125.5 million in 1995 from $427,000 in 1991.

During the time of its selection, Zvi Alon, chief executive, had said: "We're a brave company and believe in trying new things. Also, the absolute key is to be flexible. The market has changed a lot in six years, and we're willing to change our business and marketing models. Our employees realize it's OK to change."