Manugistics Group Inc.'s shares plummeted 21 percent yesterday after the Rockville software company said it expects its third-quarter loss to be larger than previously forecast.
Manugistics said it expects to report a net loss of 35 to 37 cents a share for the quarter that ended Nov. 30 and an adjusted loss of 18 cents per share to 20 cents per share.
Analysts had predicted an adjusted loss of 14 cents a share.
The company blamed the loss on slow sales as corporate customers have delayed major purchases of software applications.
Manugistics is a leading provider of logistics software, which helps direct the flow of products from the raw-material stage through manufacturing, distribution and delivery.
"It's not the competition, it's just the economy," said Deirdre Blackwood, Manugistics' vice president of corporate communications. "It seems to have made other companies continue to postpone. We'll win the deal, get to contract closure, and they'll say, 'We want to think about it some more.' "
Manugistics shares dropped significantly after the announcement, losing 73 cents, or 21 percent, yesterday to close at $2.68.
The company said yesterday it expects revenue of $61 million to $62 million when it reports third-quarter results Dec. 19.
Analysts said other software companies are facing similar revenue pictures.
"The overall software industry is still rebounding," said Robin Roberts, an analyst with Stephens Inc. "The sales pipeline is strong but the closure rate is still difficult. You may have a lot of projects going on with the customer. But when it comes down to the final sales contract, they may not sign as soon as you want to."
Software companies are also competing for the same customers.
"There's not enough deals out there to go around," said Brad Whitt, an enterprise software analyst with SWS Securities Inc. "You've got a lot of people bidding on the same deals. The buyers have all the leverage, and they're asking for major price concessions."
Manugistics has already taken several measures to reduce costs, including cutting 12 percent of its work force. But some analysts said the company would have to do more to survive in the long term.
"They'll have to do more cuts," said Peter V. Coleman, an analyst with SoundView Technologies Group. "The quality of their balance sheet continues to get negatively impacted."
Manugistics officials wouldn't comment on cost-saving plans but said they would give more details when they release earnings.
The company said it expects revenue to increase in the fourth quarter and its adjusted loss to narrow. It predicted part of the increase would come from a multiyear contract to provide software to the Pentagon's Defense Logistics Agency.
Whitt said he questions whether the company's finances will continue to improve beyond the fourth quarter. "I don't think it's sustainable. This management team tends to look at the following quarter, but not the long haul," he said.