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eGain surges on second quarter, analysts mixed

eGain Communications Corp. (Nasdaq: EGAN) jumped almost 30 percent Tuesday after the company reported a narrower-than-expected second quarter loss and said it would reach cash breakeven ahead of schedule.

Shares of the provider of customer interaction software moved up $1.47 to $6.38 in pre-session trading on the Island ECN electronic trading network.

Reporting after market close Monday, Sunnyvale, Calif.-based eGain reported a net loss of $15.7 million, or 45 cents a share, on revenues of $13.8 million. First Call analysts' consensus estimates were for a loss of 63 cents a share.

The company's net loss widened from the $9.1 million, or 34 cents per share, seen in the comparable period last year. Revenue was up compared to the $2.4 million pocketed in the same period a year ago.

Including non-cash charges, net loss for the quarter was $46.2 million, or $1.32 a share.

The company also said it now expects to reach breakeven, on an earnings before depreciation and amortization basis, by December 2001, two quarters ahead of previous estimates. Revenues in calendar year 2001 are projected to increase by about 110 percent compared to revenues in calendar year 2000, which would be short of the Street's projections of $62.8 million.

Analyst reaction company's results were mixed.

At Prudential Securities, analyst Tim Getz was bullish. He maintained a "strong buy" rating on the stock and moved up his breakeven target on the company to the March 2002 quarter. While raising earnings estimates for fiscal 2001 and 2001, the analyst lowered revenue projections for the same periods.

"In our view, the key factors which have kept pressure on this stock were concerns surrounding short-term profitability and the company's cash position to get it to profitability. After this quarter, we believe these concerns have been somewhat alleviated," Getz wrote in a research note.

Analyst Richard A. Juarez at Robertson Stephens did not share the same optimism. He cut the stock to "long term attractive" from "buy." Revenue estimates for fiscal 2001 and 2002 were also reduced while earnings estimates were raised due to the success of the company's cost-cutting and restructuring efforts.

The analyst praised the company for its control of costs but said that the real focus of investors is on revenue and earnings growth. "With decelerated revenue growth, and more emphasis on license revenue, we see additional risk to achieving revenue goals as the year is back-end loaded, and visibility is less clear than before," the analyst wrote.