ATG Sales Grow, But Return To Profitability Remains Elusive

Art Technology Group reported slightly improved year-over-year sales for its second quarter but delayed its target quarter for a return to profitability.

The application server and e-commerce software vendor reported sales of $35.1 million for the quarter ended June 30, compared with the year-ago period's $32.6 million in sales.

Excluding charges related to ATG's ongoing restructuring, which included layoffs of about 200 people earlier this month, the company reported a loss of 17 cents per share, or $11.8 million. First Call/Thomson Financial expected a loss of 18 cents per share.

In the same quarter last year, ATG reported a profit of $2.9 million, or 4 cents per share.

CEO Jeet Singh said that the company is no longer predicting a return to profitability in the fourth quarter.

"Virtually all present and prospective customers are cutting their IT spend," he said. He added that ATG continues to win nearly three-quarters of the sales scenarios in which it participates.

Some 69 percent of the business won in the quarter came from existing customers, he said.

Channel sales attained in tandem with partners such as Accenture and IBM Global Services accounted for 82 percent of ATG's sales in the quarter. The company, based here, signed 22 new partners during the quarter.

Earlier this month, ATG said it would release its Enterprise Portal Suite in the third quarter. The company also said it will port its personalization and e-commerce applications to competing application servers from BEA and iPlanet.

Singh said that no such deployments are live yet. "We have not completed the ports [to the other vendors' servers]," he said. "As you might imagine, all our partners would like to see us running on their application server first."

ATG shares, which closed Thursday trading at $3.53, is still looking for a new CFO. Singh, who said that ATG management has narrowed its list of candidates, said he expected that person will be hired in the current quarter.

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