Documentum Inc did, as we suspected it would (CI No 3,581), lower analysts expectations for 1999 yesterday. The company told analysts – but delayed telling the press – that its advice was to lower revenue estimates for 1999 by just under 5% and earnings estimates by just under 15%. The explanation is that Documentum saw more conservative buying trends over its last quarter, when it closed only four deals over $1m, compared with six or seven over previous quarters. Overall in the year there were 18 orders over $1m, and 37 over $500,000. It says it needs to add a higher value proposition to help combat the trend. According to CEO Jeffrey Miller, customers will find that added value not so much in the raw Documentum technology, but in the proposed new series of web applications it plans to release over the coming months. Those revenues aren’t likely to start kicking in until the second half of the year. Some potentially larger deals either shrunk or the orders were moved out until we could demonstrate broader compelling value, said Miller. The company is training its sales force and speeding up the introduction of the web applications, with a formal launch in March – called by Miller the biggest product launch in our history. Aside from the already completed document control management system, the company plans a financial back-office suite, and is evaluating an electronic lab notebook collaborative research application. The document control system will be expanded with quality and compliance features. Documentum has been selling application-oriented document management for the last two years under its DocSolutions effort, and company spokesperson Mark Garnett claimed the transition would be evolutionary, not revolutionary. Nevertheless, analysts at BancBoston Robertson Stephens cut the company from Buy to Long Term Attractive. Credit Suisse First Boston maintained its buy, but lowered 1999 revenues and earnings per share estimates to $170.8m and $1.08 down from $177.0m and $1.27 respectively.
