Select Software Tools Inc has reported another disappointing quarter and announced that it is restructuring to get costs in line with revenue expectations. The company also said that it is no longer in discussions concerning the possible acquisition of the company. The Irvine, California vendor of component-based modeling and management tools posted a second-quarter net loss of $3.5m, its fifth consecutive quarter in the red. Revenue for the quarter edged up 4.6% to $6.5m. The company announced that it would be undergoing an expense realignment that will see costs and headcount cut by 20%. The action is being taken to bring costs in line with what is being described as reasonable revenue expectations, although no projected run rates were offered. In addition to staff, the cost cuts will mainly come in the area of investment in non-core markets and research and development. The non-core markets essentially mean non-US, and Select will cut back international operations without fully exiting any markets. As a result, the company’s three UK offices will be consolidated into one. The news comes at a time when speculation was rife that the company was in the process of being acquired, most likely by Inprise Corp (CI No 3,440). Select said that discussions with third parties concerning an acquisition adversely affected third-quarter results and insisted that they have now been terminated. Also Monday, Select announced that Ed Holt is leaving his position as president and member of the board to pursue other interests, although the company would neither say that he chose to leave nor that his departure is part of the general shake-up. Holt’s move follows the resignation in March of chief financial officer Jerry Davison (CI No 3,363) after the company’s third- quarter number had to be restated due to a problem with revenue recognition of an OEM contract. The search is ongoing for a new CFO. The staff reduction will result in a one-time charge of $1.45m, to be taken in the third quarter. For the six-month period, net loss was $6.7m on revenue up 10.3% at $13.6m, against net income of $276,000 last year.
