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Marimba: Being Pushed Out of Portfolios

In early October, Marimba announced its third-quarter results would fall below expectations. The result was not pretty; the stock plunged nearly 50 percent to $5.63.

The company said its third quarter's revenues would range from $10 million to $10.2 million, with a net loss between 13 cents to 17 cents per share. Well, analysts expected the company to show a 4 cents a share profit.

Yesterday, the company announced the official results. Revenues were $10.1 million, which was up 21 percent from the same period a year ago. The company suffered a loss of 15 cents per share.

Why the shortfall? Of course, it seems that many companies are experiencing this problem. Yes, Alan Greenspan's handiwork is having its effect.

Yet, in the case of Marimba, the stock decline seems like an overreaction. According to the company, a big part of the sales problem was a failure to close several transactions at the end of the quarter. The company is also in the process of revamping its sales force. In fact, as of yesterday, the company announced that the problems are short-term.

Originally, the company's technology was called "push"; that is, applications would be sent to client systems from a server. With the implosion of PointCast, "push" became a dirty word. As a result, Marimba changed its marketing message.

Actually, the company has been able to transition its products to the enterprise environment. With Marimba's Castanet, companies can better manage their software - from a central location.

While the company's stock price was inflated -- within the past year, the stock was as high as $68-7/8 -- it seems as if investors went overboard. The company has a comfortable cash position of $78 million and should be able to continue to grow its operations. What's more, if the stock continues at these low levels, it could represent an attractive buyout candidate.