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FileNET cuts sales goals but sees a fourth-quarter turnaround

After cutting second-quarter employee bonuses and dropping sales targets, FileNET Corp. says it still expects a turnaround in the fourth quarter and doesn’t plan to lay off workers. In fact, Orange County’s largest software company says it plans to hire as many as 80 people this year.

“The fourth quarter will be our best quarter in the year,” said FileNET Chief Executive Lee Roberts. “It certainly won’t be stellar, but it will be when things get better.”

FileNET warned analysts this month that its second-quarter sales would come in at $80 million to $82 million, down from earlier expectations of $84 million to $87 million. In the year-ago quarter, FileNET counted $95.1 million in sales.

The company’s most recent warning is its second this year. The maker of software for managing and sharing documents also warned ahead of its first-quarter results. FileNET’s stock price has eroded 40% since the start of the year as the market soured further on technology companies.

In the first quarter, company executives blamed a steep drop in technology spending as a result of the general economic slowdown. At the time, executives said they would explore all options to save money, including possible job cuts.

But FileNET hasn’t cut jobs. In recent weeks, Roberts met with groups of workers to assure them the company isn’t planning layoffs.

“When things go bad, a lot of other companies just lay people off. When things get better, these companies have to go and hire their employees back and deal with morale problems. It takes them a year to get back,” Roberts said. “We’ve been meeting with employees to tell them we won’t do that.”

The company still plans to hire some 80 people this year across all portions of the company to help beef up ranks for the company’s newest product segments, Roberts said.

FileNET recently introduced a new bid to improve its Web-based Panagon software, which culls data from software programs, e-mails and databases to manipulate business information.

Under Roberts, FileNET has shifted its focus from document imaging,scanning and managing paper-based information,to managing data online.

The company still has plenty of cash on its balance sheet,$150 million according the company’s most recent warning,and no debt, which Roberts says can help carry the company through the market downturn.

At the beginning of the second quarter, the company held about $155 million in its coffers.

Still, the news isn’t all good. Following FileNET’s most recent warning, employees received word that second-quarter bonuses would not be paid, even to divisions that exceeded their goals, because companywide goals weren’t met.

Company management also reworked the bonus structure along with reducing sales targets. The news upset many employees, especially those who had met their sales goals, according to sources.

Third-quarter bonuses still are up for grabs, provided employees meet their revised sales targets, Roberts said.

As with many tech companies, FileNET pays quarterly bonuses as a lump sum at the end of the year.

“I would be very disappointed if we don’t pay bonuses this year,” Roberts said. n

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