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Vitria: Waiting for the Dust to Settle

Easy come, easy go. That's been the life of many employees at newly public Internet companies. A few months ago, many employees had millions in stock options - now, well, they may have a fraction of this.

Such a rude awakening is likely to generate lots of fear, which in turn may mean heavy sales of Net stocks. Although, after an IPO, employees cannot sell there shares until six months later. This is called a lock-up agreement. Late last year, of course, many Net companies went public. Now, the lock-up agreements are set to expire. And don't be surprised if employees start to sell.

But then again, this is not necessarily a sign of a company's weaknesses. There are many reasons why employees sell shares: buy a new house, diversify holdings, buy a car, or even pay for a divorce. In fact, the expiration of lock-up agreements can present interesting investment opportunities. How? Well, the selling tends to be temporary.

One company worth considering is Vitria Technology . The company builds eBusiness platforms. The flagship product is BusinessWare. With this software, companies have the tools to the do following: modeling (define the mission critical business processes using visual models); automation (this allows for the coordination of information using the models); monitor and analyze (there are real-time metrics to identify problems the moment they occur). The technology helps companies lower operating costs, increase customer satisfaction and reduce time to market.

In the latest quarter, the company increased sales by 294% to $20.5 million. What's more, losses were low: $761,000 (this compares to a loss of $2.7 million in the same quarter last year). The company has a diverse customer base, covering such industries as finance, utilities and telecom.

Vitria recently launched its Business Network. This allows trading partners to transact with each other. For example, a utility provider can have access to hubs that provide Internet services. Vitria calls this business-to-network (B2N).

The stock has been on a wild ride, soaring to a high of $106 and hitting a low of $7-5/8. Now, the stock is trading for $29-3/4. On May 11, the company's lock-up will expire. A whopping 31 million shares will be available for sale. This should put temporary pressure on the stock. But, it may be an opportunity to get the stock on a dip.