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April 5, 2005

Embarcadero adds to woes with profit warning

Data management software vendor Embarcadero Technologies has added to its accounting woes with a first quarter profits warning and a prediction that earnings per share will be lower than expected.

By CBR Staff Writer

It now expects revenue for the first quarter to March 31 to be in the $13m to $13.4m range while the consensus of analysts was for a figure in the $14.4m range. With revenue down on expectations, and the bill for accounting and compliance work up, Embarcadero expects to miss its own forecast of earnings per share of $0.05.

The company’s long-suffering shareholders, who have seen the shares drift down from $16 in December 2003, received another jolt with the news that pushed the shares down a further 20% to $5.45. At this level, the company is valued at under $150m.

The question inevitably arises following IBM’s $1.1bn purchase of Ascential Software in March of whether a pure extract, transform, and load (ETL) specialist such as Embarcadero can operate as a specialist player. While the black cloud covering its accounts will prevent a potential purchaser conducting due diligence, moves can be expected when Embarcadero files new accounts with the SEC.

Embarcadero is due to restate its results dating back to 2000. It has missed a March 31 deadline for its 10-K for the year to December 31, 2004 and now expects to file this by April 8.

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