SilverStream Software will cut 20 percent of its staff after a poor fourth quarter, but says its transition from a application server vendor to Web services specialist will produce results in 2002.

"We remain committed to achieving break-even results and therefore are reducing our head count," said Craig Dynes, SilverStream's CFO.

Based on an overall workforce of about 600 employees, the layoff will affect about 120 people.

The Billerica, Mass., firm will take a restructuring charge of between $1 million and three million in the first quarter to pay for severance packages and other expenses related to the layoffs.

In the fourth quarter, SilverStream posted a loss (excluding charges) of 63 cents per share, compared to a loss of 13 cents in the same period a year ago. Analysts polled by Thomson/First Call expected a loss of 60 cents for the most recent quarter.

Revenue for the fourth quarter was $9.7 million, significantly lower than the $26.05 recorded in the fourth quarter of 2000 as customers delayed orders on projects because of the economic downturn. SilverStream ended the year with $134 million in cash and no debt, it said.

During the fourth quarter the company launched SilverStream eXtend, a comprehensive environment for the development and deployment of of Web applications, based on Web services. The new strategy also includes application engineering, implementation, training and support services.

"(The fourth quarter) was a disappointing quarter in terms of financial results . . . It was also, however, a positive quarter in terms of execution of our new Web services-based strategy," said David Litwack, SiliverStream president and CEO in a conference call.

Shares of SSSW opened down 0.2, or 4 percent, to 4.8. In the last 52 weeks, the issue has ranged from 3.15 to 14.625.