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Gloomy outlook for software firms

WebMethods, Interwoven and JDA Software warn investors of disappointing earnings and sales in the quarter just ended.

Software makers WebMethods, Interwoven and JDA Software have each warned investors of disappointing earnings and sales in the quarter that ended Monday.

WebMethods said Thursday that it expects to post sales of $48.5 million to $49 million for the quarter ended March 31, instead of $50 million to $55 million as it had forecast. Securities analysts polled by First Call had expected sales of about $53 million.

The results also indicate a decline from the same period a year ago, when the Fairfax, Va., company reported revenue of $50.7 million. Software license revenue, a key indicator of growth, also fell, to $28 million from $32.8 million in year-ago quarter, the software maker said.

"The economic uncertainties in the March quarter made selling enterprise software more difficult and prompted some customers to delay or reduce the size of their purchases," said Phillip Merrick, chairman and CEO of WebMethods.

However, WebMethods does expect to meet its earnings targets of between breakeven and 1 cent per share for the quarter.

Earlier this month, WebMethods rival Tibco Software had likewise warned that sales slipped in its quarter, ended Feb. 28. Both companies make software designed to make incompatible computer systems work together.

On Wednesday, JDA said that it anticipates a big decline in both software license revenue and overall revenue for the quarter ended March 31, compared with the same period a year ago. In addition, it expects to report a net loss in place of the profits it posted in the same quarter last year. The company sells business management applications designed for retailers.

Meanwhile, content-management specialist Interwoven announced the resignation of its chief executive, John Van Siclen, on the same day it that warned first-quarter earnings and revenue would fall short of targets. Analysts' consensus estimates for Interwoven were $30 million in revenue and a loss per share of 4 cents. The company sells software designed to help businesses create a central place for workers to share, manipulate and store electronic documents.

for many of the largest business applications companies. In some cases, analysts have dropped estimates for some companies for the year.

On Thursday, technology research firm IDC joined the downbeat chorus, revising its global information technology spending forecast for 2003 from 3.7 percent growth to 2.3 percent growth. The lingering economic slump, business jitters over war in Iraq and the rapidly spreading SARS illness have all been cited as factors in the sector's decline.