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Breakaway to miss 3Q forecasts

2 min read

Breakaway Solutions (Nasdaq: BWAY) expects to fall short of consensus analyst estimates in the third quarter and reduce staff by 9 percent.

After market close Wednesday, the application service provider said it sees a third quarter loss ranging between 2 cents and 4 cents. First Call's survey of a dozen analysts predicted a loss of a penny per share, for the quarter ended Sept. 30.

Shares of Breakaway fell to 5.25 in afterhours activity on the Island electronic communications network, following the company's warning. Breakaway stock closed Wednesday's regular trading at 7.5, up 0.3125 for the session.

Third quarter revenue will be about equal to or slightly more than the $35.2 million reported for the second quarter, and about 7 percent below the lowest analyst estimate, Breakaway said.

The company blamed the quarterly disappointment on a bad market that resulted in contract delays, cancellations or reductions, longer sales cycles and less business in general among Internet projects.

To boost the bottom line, Breakway will cut general and administrative costs and slash 9 percent of its workforce. The company ended the second quarter with 804 employees.

Breakaway plans to keep expanding its salesforce, increase its focus in Europe and Asia, and start a program targeted at independent software vendors and niche ASPs.

"Everyone is feeling some impact from fewer dotcoms, but that trend is not new and has been used as a convenient scapegoat," said Gordon Brooks, president and CEO. "The reality is that e-service providers are facing brick and mortar customers who now demand strong differentiation, and a compelling and sustainable value proposition for their businesses.">