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Sybase posts loss, warns of layoffs

Sybase announces a larger-than-expected loss, gives the final tally of its restated results from previous quarters, and anticipates new layoff.

Sybase (SYBS) today announced a larger-than-expected fourth-quarter loss, gave the final tally of its restated results from the previous three quarters, and said it anticipated layoffs in the current quarter.

The database maker posted a fourth-quarter net loss of $25.5 million, or 32 cents a share, compared with profits of $5 million or 7 cents a share a year earlier.

Analysts, having revised their estimates on the company downward after it issued a preliminary warning earlier this month, had expected the company to report a loss of 7 cents a share, according to First Call. Sybase said earlier this month that its loss would "substantially" exceed its previous warning, which predicted a loss of between 2 cents and 7 cents a share.

"We expect to take whatever actions we're going to take in the first quarter...Following those actions, we should be at a run rate of both revenues and expenses that would assure profitability," Mitchell Kertzman, Sybase chairman and chief executive, said in a conference call. "We'll be aiming to exit the quarter at a profitable run rate and then to be profitable starting in the second quarter for the rest of the year and the year as a whole." (Kertzman is a board member of CNET: The Computer Network.)

He added that the company expects to reduce its workforce by the end of March in order to move toward profitability on moderate revenue growth. Kertzman noted it is too early to tell the number of employees who will be laid off.

The company's revenues for the quarter reached $223.2 million, down from $267.8 million a year ago. Licensing revenues for servers fell during the quarter, down 19 percent from a year ago, and those were down 17 percent from the previous quarter.

Revenues from licensing tools fell by 30 percent from the previous year but was up 12 percent over the previous quarter. That sequential increase marked the first one since the third quarter in 1996, according to Kertzman.

Overall, licensing revenues dropped to $110.5 million, down from 31 percent during the previous year. Revenues from the company's services business rose slightly in the quarter to $112.7 million, up 7 percent from a year ago and up 2 percent over the previous quarter.

Kertzman said the company would like to shift its revenue pie to 60 percent from licensing fees and 40 percent from services, rather than the virtual 50-50 split where it currently stands. He noted licensing deals will later drive service deals and, as a result, should make up a bigger slice of the pie.

For the year, Sybase posted a loss of $55.4 million, or 70 cents a share, compared with a loss of $79 million or $1.05 a share reported during the previous year. Revenues fell to $903.9 million for fiscal 1997, down from $1 billion the previous year.

The struggling database software company said it readjusted its revenues downward by $43 million for the first three quarters of fiscal 1997. The company earlier had estimated that revenues would be readjusted by between $60 million and $65 million.

First-quarter revenues were $232.2 million, compared with $241.9 million reported a year ago. In terms of net income, the company reported a loss of $6.2 million vs. the $3.5 million profit it posted a year ago.

Sybase's second-quarter revenues were restated to $215.5 million, down from the figure it released previously, $237.6 million. The company also posted a net loss of $17.8 million, compared with its earlier statement of profits of $4.4 million.

The company's third-quarter revenues, meanwhile, reached $233 million, compared with $244.2 million reported earlier. In addition, it recorded a loss of $6 million, compared with the $5.2 million in profits it initially posted.

Sybase had attributed the restatement to the fact that five employees in its Japanese subsidiary had disregarded the company's policy for booking revenues. The company typically counts revenues once products ship to the end user, as opposed to when they ship into the channel.