AvantGo Reports Record Revenue, Cuts 15% of Staff

AvantGo, Inc. has reported record revenues for its most recent fiscal quarter. Revenues were $7.3 million, a 340% increase over revenues for the same quarter last year, and an 11% increase over last quarter's. The company continued on its path to profitability by narrowing its operating losses for the second straight quarter. The net loss, before non-cash charges, was $9.0 million versus $10.6 million last quarter.

In order to cut costs, AvantGo is reducing its staff by about 50 people, or 15%. These are the first job cuts the company has made, and CEO Richard Owen said "It's a fairly modest amount. We see it as a tilt of the rudder, rather than a really major event."

David Cooper, AvantGo's chief financial officer, said "We are seeing increasing Enterprise adoption of our mobile infrastructure software and services." Selling private versions of the AvantGo service to large companies is the company's largest source of income. Over 25 major organizations, including Northern Trust, Brown-Forman Corporation and The New York Stock Exchange, purchased AvantGo mobile business solutions in the most recent quarter.

"We've affirmed our guidance for the year," Mr. Owen said. "We feel things are on track. We're having to work hard to stay on track, but the point is that we're on track."

Merrill Lynch analyst Mark Fernandes said the job cuts make sense to keep the company on a path toward profitability. "They have to keep in mind that the environment is pretty tough," he said.

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AvantGo likely will not last another year.

Satan @ 4/26/2001 9:12:09 PM #
Much like the dot.coms, it is now time for PDA hardware and software companies to start showing profitability, as they are no longer able to justify their ongoing cash hemorrhage.

The grim reality:
- For the most part, freeware applications provide equal or superior functionality to commercial Palm apps.
- Advertising opportunities in the Palm software world are limited.
- Not many innovative programs are being developed, and prospects for a new commercial "killer app" showing up any time soon are dismal.
- Palm is in serious financial trouble, with no significant OS upgrades in 3 years + few programs worth purchasing (but thousands of useless apps padding the stats) + developers struggling to make a living = a recipe for impending disaster in the PDA industry.

So now we hear: In order to cut costs, AvantGo is reducing its staff by about 50 people, or 15%. These are the first job cuts the company has made, and CEO Richard Owen said "It's a fairly modest amount. We see it as a tilt of the rudder, rather than a really major event."

There are going to be many more "tilt(s) of the rudder" during the next six months.


RE: AvantGo likely will not last another year.
I.M. Anonymous @ 4/27/2001 8:43:28 AM #
Although this looks bad it all depends upon looking at their P&L. It is conceivable that they could be profitable next year. Remember that they do have a revenue model. Although we get their services for free they charge for private versions of AvantGo. That is where their revenues come from, not from advertising. Everyone acknowledges that their product is superior. Let's say that their 50 employees make $40K/year. That is a savings of $2M per year. The real question is whether they can keep increasing revenues at the rate that they are increasing and keep costs close to what they are now. IF they can do that they will be profitable.

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