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FTP won't meet growth target

FTP Software posts another loss for its first quarter and pushes off its goal of reaching 25 to 30 percent growth this year.

FTP Software (FTPS) posted another loss for its first quarter and pushed off its goal of reaching 25 to 30 percent growth this year due to slower-than-expected sales of its gateway products.

The net loss for the first quarter in 1997 was $11 million, or 33 cents per share, compared with a net loss of $8.4 million or 31 cents per share for the same period in 1996.

These results are consistent with the range of preliminary results released earlier this month. Prior to releasing its preliminaries, analysts were anticipating a loss of about 10 cents a share.

The company cited lower-than-expected sales volumes with its IPX/IP gateway products as a significant cause for the shortfall.

FTP was formerly a giant in offering a TCP/IP communications software stack for Microsoft (MSFT) operating systems, but the company has shifted its focus to Java-based push technology to network administrators.

The loss from continuing operations was $11 million, or 33 cents a share, compared with income from continuing operations of $2.5 million in the first quarter of 1996.

Revenues from continuing operations for the first quarter were $21.4 million, compared with $26.8 million for the same period in 1996.

"The company is disappointed with revenue performance and the turnaround is about three months behind schedule," said Bert Hotchfeld, an analyst with Josephthal Lyon & Ross.

In February, FTP announced a partnership with IBM (IBM) in which the companies would develop and market TCP/IP-based technologies and FTP's "virtual IP" (VIP) networking concept.

Despite missing its own expectations, the company pointed to its alliance with IBM as a step in the right direction.

Analysts agree. "They need to develop further range of partners. They need the IBM relationships and other partners similar to that, and then they can start growing. More partners will definitely be key [in] eliminating those losses or at least stop the bleeding," Hotchfeld added.

During the quarter, FTP rolled out its Secure Client, InterDrive, and Internet Gateway for NT products.

The company's stock is hovering around its 52-week low: the stock closed yesterday at 4-1/2.