Pegasystems warns, restructures

Pegasystems (Nasdaq: PEGA) said Tuesday its fourth quarter revenue will fall 20 percent sequentially, and it will lay off workers to improve profitability.

Shares were off 0.03 to 2.28 Tuesday.

The restructuring, to be completed in the first quarter of 2001, will slash about 75 employees out of 600. The company expects the restructuring to improve productivity and generate savings of more than $5 million in 2001.

It will also result in a one-time charge to earnings of about $1 million, or 3 cents per share, in the fourth quarter. The company also expects fourth quarter revenues will be about 20 percent below the amount reported in the third quarter because several licenses targeted for the fourth quarter will slip into 2001.

Pegasystems said its strategic reorganization will increase cash flow and improve profitability.

The company said that despite the disappointment with fourth quarter results, it plans to report record revenues in 2000, and anticipate further increasing revenues in 2001, based on recent new customers sales and implementations.