Company Restructures Around New Products and Focuses on Enterprise Product
Rollouts
SAN MATEO, Calif., Feb. 20 /PRNewswire/ -- Eloquent, Inc. (Nasdaq: ELOQ),
the leader in Web-based rich media business communications solutions, today
reported financial results for the fourth quarter ended December 31, 2000.
The company also announced it had completed its restructuring to resize and
align itself with the market opportunities resulting from its new product
introductions. Eloquent is focusing on applications for "enterprise product
roll-outs" and recently formed a strategic relationship with Microsoft. The
agreement between Eloquent and Microsoft calls for developing an end-to-end
enterprise communications solution, a principal application for which will be
large corporate product introductions.
The restructuring included a headcount reduction of approximately
50 percent and significant reductions in space costs and other expenses. The
move is expected to reduce Eloquent's cash burn-rate to $3-4 million per
quarter going into 2001, down from $7.6 million in the December quarter. The
company had cash and cash equivalents of $40.5 million at the end of the
December quarter.
Revenue for the fourth quarter ended December 31, 2000 was $1.9 million,
compared to the fourth quarter 1999 revenue of $4.1 million, and the prior
quarter's revenue of $3.2 million.
Gross margin in the fourth quarter was a negative $309,000 due to the
lower revenue and the associated fixed costs in the fourth quarter prior to
the restructuring.
Net loss for the fourth quarter, excluding the effect of stock-based
compensation charges and one-time special charges, was $7.8 million or a loss
of $0.44 per share. This compares to a net loss, excluding stock-based
compensation charges, of $7.7 million or a loss of $0.45 per share for the
prior quarter and a loss of $4.2 million for the fourth quarter of 1999.
For the fourth quarter of 2000, the stock-based compensation and special
charges of $14.4 million can be summarized as follows: (a) $6.0 million
restructuring and impairment charge to recognize expenses such as severance
and unused space associated with the resizing of the company, and the
write-down of assets no longer in use; (b) $(1.3) million stock-based
compensation non-cash credit which is the net of a $0.7 million fourth quarter
charge representing continuing amortization and a $(2.0) million net credit
resulting from workforce reduction and resultant reversal of prior charges;
(c) $2.2 million non-cash charge to adjust the recorded value of investment in
another company, eSpoc Inc., to reflect current market conditions;
(d) $7.5 million non-cash charge to comply with the November 2000 SEC
accounting requirement for companies engaged in financing activities that
involved beneficial conversion rights subsequent to May 1999.
"We made the decision to downsize in order to achieve a dramatic reduction
in the cash burn rate," said Cliff Reid, Eloquent's CEO. "We eliminated
non-productive sales force personnel to reduce the sales organization and we
further reduced headcount by changing our content production model to an
outsourcing-based model."
"The relationship we formed with Microsoft during the fourth quarter, as
well as our revised product strategy, puts us in a strong position for revenue
generation in the targeted market of rich media solutions for new product roll
outs," Reid observed.
Market Focus
Eloquent announced a major restructuring of the company on December 18,
2000 based upon a strategic study of its business opportunities conducted with
the assistance of The McKenna Group. The company has now focused its sales
and marketing energies on revenue generation within the market segment that
uses streaming media solutions for rolling out new products to the
marketplace. Eloquent is traditionally strong in this area with major
customers rolling out products to their sales force, partners, and customer
base. As part of the restructuring, Eloquent will focus its research and
development energies on the company's rich media platform products and
technologies.
New Corporate Structure
On December 18, 2000 Eloquent announced a new corporate structure that
will enable the company to seize the current market opportunities for rich
media within the enterprise. The company announced that effective January 1,
2001, the company would be organized into two business units, the Software
Business Unit and the Content Business Unit. The Software Business Unit is
responsible for selling Eloquent's new product offerings aimed at the new
product roll-out market segment. The Content Business Unit is responsible for
creating rich media content for Eloquent's customers who want professional,
outsourced content creation.
Microsoft Partnership
On October 24, 2000, Microsoft and Eloquent announced a strategic
agreement to develop a comprehensive end-to-end enterprise communications
solution for the management and delivery of streaming media. Steve Ballmer,
president and CEO of Microsoft, demonstrated the Microsoft Windows Media(TM)
Producer with the Eloquent(R) ECS 6.1 communications server at the Streaming
Media West trade show in San Jose, California, on December 12, 2000. The
Microsoft relationship will continue to be a key element in development of the
rich media platform as well as in business development efforts.
Major Product Initiatives
During the quarter, Eloquent announced its next major product release, the
Eloquent(R) ECS 6.1 communications server, which features increased rich media
creation, management, and delivery capabilities. The product was announced on
December 12 at the Streaming Media West industry tradeshow.
February 20th Conference Call
During a conference call on February 20, 2001 at 2:00 p.m. PST, Chief
Executive Officer Cliff Reid and Chief Financial Officer John Curson will
present an overview of the December quarter 2000 and Eloquent's strategic
positioning after its restructuring. To listen to the call, please dial
888-792-1069 or 703-871-3019 at least 5 minutes prior to the start.
Interested parties also have the opportunity to listen to the conference call
live via the link on the investor relations page at http://www.eloquent.com .
The webcast will be available at that address for 30 days. A replay of the
call will be available through February 27, 2001 by dialing 703-925-2435 code
4987397.
About Eloquent, Inc.
Eloquent (Nasdaq: ELOQ) is the leader in Web-based rich media business
communications solutions. Eloquent products and services quickly and
effectively transfer knowledge to large audiences over the Web using
synchronized on-demand video, audio, text, and graphics. Eloquent solutions
improve an organization's ability to deploy knowledge quickly. They reduce
time-to-market, increase customer satisfaction, and enable on-demand strategic
communications that drive top-line performance-at a fraction of the cost of
traditional methods.
Eloquent's full service solution offering includes Web-based player and
server software, content production facilities, content and application
hosting, and a complete professional services offering. Eloquent's open
architecture integrates easily with industry-leading technologies, enterprise
applications, and other digital content. Eloquent's worldwide customer base
includes over 2 million users across more than 250 companies.
For more information, please visit the company's Web site at
http://www.eloquent.com .
Except for historical information, all of the expectations and assumptions
contained in the foregoing are forward-looking statements involving risks and
uncertainties. Important factors that could cause actual results to differ
materially from such forward-looking statements include, but are not limited
to, competition in our markets and for qualified personnel, timing of customer
orders and technological change. For additional information regarding these
and other risks, refer to Eloquent's recent Prospectus, filed on February 16,
2000, and the Company's most recent Form 10-Q, on file with the Securities and
Exchange Commission.
Eloquent and the Eloquent logo are trademarks of Eloquent, Inc. All other
trademarks are the property of their respective owners.
ELOQUENT, INC.
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2000 1999 2000 1999
(unaudited)
Revenue:
Software licenses and
maintenance $660 $2,109 $5,261 $2,959
Services 1,200 2,008 9,586 9,533
Total revenue 1,860 4,117 14,847 12,492
Cost of revenue:
Software licenses and
maintenance 373 239 1,425 646
Services 1,796 1,827 7,714 6,517
Total cost of revenue 2,169 2,066 9,139 7,163
Gross margin (309) 2,051 5,708 5,329
Operating expenses:
Research and development 1,546 542 5,300 1,959
Sales and marketing 5,113 3,172 20,841 8,856
General and administrative 1,350 913 4,927 3,499
Stock-based compensation (1,317) 2,413 4,140 5,756
Restructuring expense and
impairment charge 6,000 -- 6,000 --
Total operating expenses 12,692 7,040 41,208 20,070
Loss from operations (13,001) (4,989) (35,500) (14,741)
Interest expense and other
charges (126) (1,757) (1,500) (2,175)
Impairment of investment (2,250) -- (2,250) --
Interest and other income 689 178 2,951 301
Net loss before extraordinary
item (14,688) (6,568) (36,299) (16,615)
Extraordinary loss on early
extinguishment of debt -- -- (7,453) --
Loss before cumulative effect
of accounting change (14,688) (6,568) (43,752) (16,615)
Cumulative effect of
accounting change -
beneficial
conversion feature (7,500) -- (7,500) --
Net loss $(22,188) $(6,568) $(51,252) $(16,615)
Basic and diluted net loss
per share:
Net loss before
extraordinary item and
cumulative effect of
accounting change $(0.84) $(2.41) $(2.36) $(5.47)
Extraordinary loss -- -- (0.48) --
Cumulative effect of
accounting change -
beneficial
conversion feature (0.43) -- (0.49) --
Net loss $(1.27) $(2.41) $(3.33) $(5.47)
Shares used in computing
basic and diluted
net loss per share 17,531 2,725 15,381 3,036
Pro forma basic and diluted
loss per share: *
Pro forma loss per share $(0.44) $(0.42) $(1.47) $(1.07)
Shares used in computing pro
forma net loss per share ** 17,531 9,877 16,283 10,195
* Pro forma loss per share is calculated by excluding stock based
compensation charges, restructuring expense and impairment charges,
extraordinary items and the non-cash effect of a change in the
accounting rules and using the weighted average number of shares of
Common Stock outstanding, including the pro forma effects of the
conversion of the Company's Series A, B, C and D Preferred Stock into
shares of the Company's Common Stock as if such exercise and conversion
occurred at the beginning of the period.
** Shares used in computing pro forma net loss per share represents the
weighted average number of shares of Common Stock outstanding,
including the pro forma effects of the conversion of the Company's
Series A, B, C and D Preferred Stock into shares of the Company's
Common Stock as if such exercise and conversion occurred at the
beginning of the period.
ELOQUENT, INC.
CONDENSED BALANCE SHEETS
(in thousands)
December 31, December 31,
2000 1999
ASSETS
Current assets:
Cash and short-term investments $40,456 $17,174
Accounts receivable, net 2,768 3,439
Prepaid expenses and other current
assets 370 414
Total current assets 43,594 21,027
Property and equipment, net 3,348 1,915
Other assets 2,651 2,323
Total assets $49,593 $25,265
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $- $3,000
Accounts payable and accrued liabilities 4,553 3,917
Accrued restructuring liability 3,173 --
Capital lease obligation, current portion 709 618
Deferred income 1,128 787
Total current liabilities 9,563 8,322
Capital lease obligation, net of current
portion 230 777
Long-term notes payable -- 8,477
Stockholders' equity:
Capital stock 128,168 52,100
Unearned compensation (2,462) (9,564)
Unrealized gain on investments 193 --
Accumulated deficit (86,099) (34,847)
Total stockholders' equity 39,800 7,689
Total liabilities and
stockholders' equity $49,593 $25,265
SOURCE Eloquent, Inc.
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Related links:
http://www.eloquent.com
CONTACT:
John Curson, Chief Financial Officer of
Eloquent, Inc., 650-294-6500; Analysts, Allison Parker, General
Inquiries, Pam Roberts, or Financial Media, Dawn Swidorski, all
of The Financial Relations Board, 415-986-1591
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