EmailProgress Software (PRGS $18.22 -2.07) issued downside guidance for the second quarter with EPS of $0.17-0.19 versus the $0.28 Capital IQ Consensus and revenues of $110-115 million versus the $124.89 million consensus, The company's financial results were adversely impacted by the following factors, which contributed to a very uncertain environment in the quarter: (-)Customer, partner and employee uncertainty created by the announcement of the strategic plan; The undertaking of large global restructuring efforts; The marketing for divestiture of non-Core products; The re-architecture of our organization and our go-to-market strategy; and Overall weakness in the global economy.
The company is moving aggressively to implement its new strategic plan including the following specific actions: 1) Cost Reductions - Progress initiated its $55 million cost reduction efforts during the fiscal second quarter as reductions in its global workforce were substantially completed in all jurisdictions besides Europe, where the legal notification has begun; 2) Re-investment - The Company has begun to re-invest $15 million of this cost reduction back into sales, marketing and product development for the Core business; 3) Share Repurchase - The company remains committed to completing $150 mln of its $350+ million authorized share repurchase program this fiscal year, with the balance to come in fiscal 2013; and 4) Divest non-Core Product Lines - The co has made substantial progress toward the divestiture of the ten product lines identified as non-Core in its strategic plan. Interest has been expressed in these product lines by many third parties, and the Company remains optimistic that it can complete the divestitures by the middle to end of fiscal 2013.
