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Wall Street snubs Sybase

Sybase stock drops even though the company exceeded analyst expectations for its fourth quarter.

Database software company Sybase (SYBS) traded as high as 20 a share this morning but closed at 18-1/4 a share, down 1/2 of point from yesterday, even as the company exceeded analysts expectations.

Sybase yesterday reported net profits for its fourth quarter, moving the company back in the black after taking hits earlier this year for restructuring charges.

Sybase, which reported losses during the last three quarters, posted a net profit of $5.1 million, or 7 cents a share, for the quarter ending December 31 compared with profits of $6 million or 8 cents a share a year ago.

Revenues were flat at $267.8 million for the quarter over a year ago but jumped in the last three quarters.

Edgar Bierdeman, an analyst with Dakin Securities, offered this preliminary conclusion: "It looks positive."

Mitchell Kertzman, chief executive and president, said Sybase and its competitors usually face a tough first quarter in comparison to the fourth.

"We anticipate it will be challenging, but we'll work hard to stay profitable in light of that," Kertzman told CNET. "We'll keep a tight focus on our costs and won't let spending get ahead of revenues." (Kertzman is on the board of directors of CNET: The Computer Network.)

Looking a little further ahead, Kertzman said the second quarter will mark the beginning of the company's move beyond its recovery mode. "It'll be the period of our marketing push for new products and refreshing old ones," he said.

Sybase restructured its operations during the early half of the third quarter by cutting non-core products and streamlining operations. Excluding the restructuring charge, the company posted an operating profit in the third quarter, but its revenues remained flat over the previous quarter.

For the year, Sybase reported a net loss of $79 million, or $1.05 a share, compared with a net loss of $19.5 million or 27 cents a share a year ago. In 1995 it took a $44 million acquisition charge.

Revenues for the year reached $1 billion, up from $956.6 million a year ago.

The company recently fell from its number-two database software vendor spot, as competitor Informix Software moved ahead.

Nonetheless, Sybase in December caught the attention of renowned financier George Soros, who led a group of investors in acquiring a 5.15 percent stake in the company for $23.3 million.

The investors indicated they planned to hold the shares for investment purposes, according to a Securities and Exchange Commission filing.

In other developments with the company, Sybase today said it expanded its relationship with Federal Express under an agreement to provide databases, middleware, and development tools to the letter and parcel carrier.