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WebMethods tripped up by economy

The business-to-business software company joins the list of tech companies blaming a faltering economy for revenue shortfalls, saying it will miss fourth-quarter earnings.

Business-to-business software company WebMethods joined the list of tech companies blaming a faltering economy for revenue shortfalls, telling investors Thursday it would miss fourth-quarter earnings and sales expectations.

WebMethods expects to record revenue between $60 million and $62 million in the fourth quarter, and forecasts earnings to be between breakeven and 3 cents per share.

Analysts were expecting the company to post a profit of 6 cents per share on sales of $66.42 million, according to First Call.

WebMethods may have been caught short by the lingering economic slowdown. CEO Phillip Merrick told analysts in a conference call in January that "we've not seen anything in our business that suggests we're going to be impacted."

The company upped revenue expectations then, telling analysts it saw fiscal 2001 revenue of $205 million, which would have required fourth-quarter sales of $65.8 million. Before that, analysts had been expecting revenue of $56.9 million and earnings of a penny a share, numbers that it appears to have easily matched or beaten.

Merrick said in a release Thursday that the company continues to see "healthy demand" from customers for its services.

"However, we will need to reassess our revenue guidance and further monitor our cost structure given that our customers, in a number of cases, are deferring IT spending decisions," he said.

WebMethods makes software that helps companies manage supply chains. Its products, based on XML (Extensible Markup Language), work with other business-to-business products, including software from such companies as SAP and Ariba.

Competitors of WebMethods have seen their share of trouble. Ariba, i2 and Commerce One have announced earnings warnings. The three companies said that customers were postponing purchases and stretching out projects in a tight economy.

WebMethods said revenues for the fiscal year would likely be between $200 and $202 million, compared with the $211.85 million predicted by analysts.