Vignette Shifts Sales Stategy After Disappointing Quarter

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Vignette executives blamed weak fourth-quarter sales on reluctance by companies to spend money on strategic, enterprise applications and said the company was adjusting its sales and marketing efforts to target more midtier companies and tactical, departmental deployments.

Vignette posted sales of $52.7 million for the quarter ended Dec. 31, which was in line with a warning it issued Jan. 7 and well below an earlier projection of $63 million to $72 million in sales.

The company's core operating loss of $13.7 million and loss of 4 cents per share was also in line with its warning but below earlier expectations of a loss of 1 cent to 3 cents.

In the same period a year ago, Vignette broke even on revenue of $123.9 million.

CEO Greg Peters said in a conference call that while the quarter was disappointing, the company was seeing strong reception from its installed base for its V6 content management suite, released in September.

While he anticipates companies will begin making strategic investments in cross-enterprise content management solutions this year, Peters said the company is also putting out the message that companies can cost-effectively deploy V6 solutions in departmental applications and migrate to more comprehensive solutions. "By choosing Vignette, customers do not have to choose an either-or solution," he said.

The company said its direct-sales force, which had been focusing on a set number of Global 2000 accounts, will now also begin targeting second-tier accounts and departmental and tactical deals, based on geographic region.

"We've changed course with our marketing and demand generation a couple of months ago so all we had to do is put the catchers in place," said Tom Hogan, president and COO.

About 60 percent of the company's sales were generated by partners during the quarter, which was about the same as the prior quarter. Company executives did not say how the new sales strategy would impact its channel.

The company said it is expecting sales of between $46 million and $50 million in the first quarter and a core loss of 7 cents to 8 cents per share.

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