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Sofware vendor not making progress

Progress Software announces that its fourth-quarter net income plummeted 89 percent, a result of slowing in its client-server business.

Progress Software (PRGS) today announced that its fourth-quarter net income plummeted 89 percent, a result of slowing in its client-server business.

Shares of Progress slipped 14 percent during trading today, falling as low as $18 a share.

During the second quarter, the company's net income dove to hundreds of thousands from millions as the client-server industry slowed and the company took a one-time charge for acquiring Crescent Software. Net income for the fourth quarter ending November 30 was $705,000, or 5 cents a share, down from $6.2 million or 45 cents a share for the same quarter a year ago.

The company's earnings missed Wall Street's estimate of 7 cents a share, according to First Call.

Revenues also dropped; they were down 15 percent to $45.2 million from $53 million.

"Every quarter since [the second quarter] it's been down," said Progress CFO Bud Robertson. "Client-server in general had slowed down for every company. Most have been flat or down significantly."

"We have never lost money. We are generating cash, obviously not up to speed with last year, but it's not all doom and gloom," Robertson added.

In the second quarter, earnings per share were 1 cent but grew to 2 cents in the third quarter.

The company doesn't have the needed name recognition, he said, adding that in a tough market it is difficult to distinguish oneself without brand identity.

"What happens in a period of intense competition is that weak companies do worse," said analyst Bert Hockfeld with Josephthal Lyon & Ross in New York. "It is a very crowded space."

WebSpeed, which is designed to help companies develop Internet transaction processing applications, is one of dozens of Web development products.

Hochfeld added the company has not developed the market share to make them a growth company. And he predicts a five percent growth for 1997, while the company had predicted ten percent growth.

During the quarter, Progress shipped its AppServer product, part of the company's latest advancement in development tools that help build and deploy enterprisewide applications.