Pegasystems Inc, the customer service management software house which is currently drowning under a sea of class action law suits, has now warned investors that it is unlikely to meet revenue or profit expectations for its second quarter in a row. The Cambridge, Massachusetts-based company said a slowdown in the spending patterns of its key customers would cause fourth-quarter revenues through December to fall significantly below the current expectations of $33m to $35m. In October, Pegasystems claimed that its third-quarter revenues through September had tripled to $27m but the company still missed analyst’s earnings estimates and the shares tumbled amid a flurry of downgrades from brokerage houses. The shares dropped even further in November after the company revealed that serious question marks hung over the validity of its third-quarter sales numbers, preventing the company from filing its figures with the SEC until the auditors had reviewed the quarter. Pegasystems now faces multiple class action law suits as a result of this delay and it also faces a potential delisting from the Nasdaq stock market if it cannot clean up its third-quarter financials and file them in time. The stock, which currently trades with the dreaded ‘E’ appendage to its ticker symbol denoting its late filing, fell sharply in early trading on Tuesday and now dwells at around $4 compared with highs of $30 in July. Pegasystems is no stranger to accounting controversy, however, as in November of last year the company fired its auditors after a row over revenue recognition caused Pegasystems to show a surprise loss for its third quarter.
