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General Magic losses mount

The software maker reports a widening first-quarter loss and a whopping 82.5 percent drop in revenues.

General Magic (GMGC) today reported a widening first-quarter loss and a whopping 82.5 percent drop in revenues.

The network-based communications software maker reported a net loss of $7.8 million, or 29 cents a share, for the quarter ending March 31. It lost $7 million, or 27 cents a share, a year earlier.

Meanwhile, the company reported revenues of $489,000 for the quarter, compared with $2.8 million a year ago. Revenues also fell from the previous quarter, when they were $1.2 million.

Company representatives attributed the revenue shortfall to a shift in General Magic's product strategy it initiated in late 1996.

Later this month General Magic will conduct field trials of its subscription-based service, Serengeti, in which users can access email, voice mail, and faxes using cellular phones and other devices.

This move to develop new revenue sources comes as sales of the Magic Cap operating system have dwindled. The company, however, expects to have its 3.0 version completed in the near future and has signed up Starfish Software as its first technology partner. Starfish's Java-based client-server software will be incorporated into the company's network service.

General Magic is also stepping away from relying on its licensing fees and royalties. It is seeking to develop direct revenues for its products and services.

Commitments to licenses and restructuring costs from a 50 percent workforce reduction last year will continue to hurt the company's cash position and investments this year, analysts expect.

General Magic had $57.6 million in cash and investments at the end of the quarter.