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Losses mount for Macromedia

The software maker reports a bigger-than-expected loss for its fiscal third quarter and says not to expect improvement until midyear.

Software maker Macromedia reported a bigger-than-expected loss Wednesday for its fiscal third quarter and said not to expect improvement until midyear.

Including one-time charges, the company reported a loss of $42.9 million, or 74 cents a share, on revenue of $73.3 million for the quarter ended Dec. 31. That compares with a profit of $12.8 million, or 23 cents a share, on revenue of $103.3 million in the same period a year ago.

"I hope we've found the bottom here," CEO Rob Burgess said during a conference call. He partly attributed the problems to the fact that the company didn't release any new products last quarter and to the effect the Sept. 11 terror attacks had on sales.

Excluding charges, the company reported a loss of $10 million, or 17 cents a share. On that basis, a consensus of analysts polled by First Call had expected Macromedia to report a loss of 15 cents a share.

Macromedia warned last month that it would post a loss for its third quarter.

The company said in the earnings statement that it expects revenue to be flat for the current quarter, with the company returning to profitability in the first quarter of fiscal 2003.

First Call estimates call for a loss of 45 cents a share for the 2002 fiscal year, which ends March 30, compared with earnings of $1.18 a share for the previous fiscal year.

Macromedia has been particularly hard hit by the deflation of the Internet economy. Its leading product lines--Dreamweaver for designing Web pages and Flash animation software--largely depend on the Web.

Burgess said the company will announce major upgrades of several products in the next three to six months, including major efforts to integrate tools such as Flash with Macromedia server products such as ColdFusion, which delivers software functions over the Internet.

"We believe there's a whole next generation of experiences that are really going to transform the Web as we know it," Burgess said. "We now believe we've amassed all the technology we need to deliver those experiences."

The company has tried to diversify by tailoring its products for other formats, including adapting Flash to run on OpenTV's interactive television system. The company also opened up the Flash source code last year, hoping to spur adoption by makers of devices such as game consoles and Web-surfing tablets.

"We've been investing heavily in the next generation, in embedded devices," Burgess said. "We've made a lot of early progress there in getting Flash into devices like set-top boxes and mobile phones."

Earlier this week, the company acknowledged it had laid off "a few dozen" workers during the quarter, attributing the cuts to routine organizational changes in the company's Web-graphics and animation-software business. Macromedia has about 1,400 workers.