RealTime IT News

Vignette's Ride North Will Be Short

It's not often that a personnel announcement - even at the highest levels - has the kind of instant impact on a company's stock than did the one made Tuesday by publishing and personalization software vendor Vignette .

There it was, however, a 34.5% one-day gain to $6.94 per share, fueled by news that Vignette had lured away Siebel Systems' senior VP of sales to become its president and chief operating officer.

Sure, the entire market rode a strong wave Tuesday, with the Nasdaq climbing 2.87% and internet.com's Internet Stock Index, or ISDEX, gaining 6.0%. But VIGN blew away every other tech ticker on Tuesday, easily eclipsing the 26% spike enjoyed Monday by Amazon.com following an unfounded report that the e-tail giant was in alliance talks with Wal-Mart.

Are investors over-reacting to Vignette's hiring of highly regarded Thomas Hogan, who spent nearly two decades in various executive posts at IBM before joining Siebel less than two years ago?

Absolutely. While Hogan may be good, he can't do a whole lot to alleviate the main source of Vignette's recent woes - a slowdown that is gripping the entire economy. Indeed, based on the delirious market reaction, you'd think VIGN had hired Alan Greenspan. Or Hulk Hogan.

It should be noted that, under Hogan's watch, Seibel more than doubled sales in the fourth quarter and said in late January that Q1 sales might even exceed forecasts. You haven't heard that from an Internet company lately. Saying it and doing it, though, are two different things.

Hogan has his work cut out for him in his new job. Vignette announced on Jan. 17 that it would post a loss in the first quarter and lay off 15% of its workforce. The company, which makes e-commerce and publishing software for companies with Web sites, said customers are holding back on orders and forecast a net profit for the year of 9 cents per share, or 2 cents lower than previous predictions.

Then there's Vignette's battered stock. Even with Tuesday's huge gain, VIGN shares already are down 61.4% this year. Since last March 10, when shares hit its all-time high of $100.67, Vignette has plunged 93.1%.

It's doubtful Hogan can work much magic on the ticker side of things, given that SEBL has nosedived 75.8% in the past four months, including 57.1% this year alone. (SEBL fell 13.8% on Tuesday in response to Hogan's departure.) Siebel also was one of many business software companies to be hit with a slew of downgrades last week after database giant Oracle missed Q3 forecasts.

Look for Vignette to give back much of Tuesday's gains in the next few days after Hogan euphoria wears off and investors realize we're still in a downturn.