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Breakaway Solutions, Inc. (Nasdaq: BWAY) fell 1/8 to 7/8 Friday after the company, which provides software and services that help companies do business over the Internet, said fourth-quarter results will be below analysts' expectations because of a sluggish market.
The Boston, Massachusetts-based company said revenue for the quarter will be US$22.5 million to $24 million, up about 65 percent from the year-earlier quarter. Full-year revenue will be about 300 percent ahead of 1999, at $118 million to $119 million, Breakaway said.
However, the company said it is looking for a loss before extraordinary items of 26 to 28 cents per share for the fourth quarter. The decline reflects a drop in business from Internet Capital Group companies, a "continuing change in the market environment" and a shift in focus away from dot-com clients and toward brick-and-mortar companies with Internet operations.
The company also announced additional layoffs, saying it will cut 30 percent of its staff, rather than the 10 percent originally announced. The job cuts, along with other cost reductions, will save about $10 million each quarter beginning with the first quarter of this year, the company said.
"Like many in our sector, Breakaway Solutions has felt the impact of a changing marketplace, particularly a shift away from a reliance on dot-com revenues," said president and chief executive officer Gordon Brooks. "Unfortunately, these market changes have combined with Internet Capital Group's reduction of its investments in its affiliate companies to make this quarter particularly challenging."
Internet Capital, an incubator for e-business companies, is restructuring its holdings to focus on a few key businesses.
Analysts at First Analysis reportedly downgraded Breakaway to neutral from accumulate following Friday's announcement.
Breakaway plans to report fourth-quarter results on February 16th.
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