WebEx Celebrates Record Revenue

WebEx Communications Inc. , a collaboration infrastructure provider, seems to have no reason to be concerned that Microsoft recently bought its biggest rival (see Microsoft to Acquire PlaceWare). Yesterday the San Jose, Calif.-based company announced record results for both its fourth quarter and fiscal year, which ended December 31, 2002.

For the quarter, revenues were $40.3 million, a 56-percent increase from $25.9 million in the fourth quarter of 2001. The company reported a $7.4 million operating profit for the quarter (compared to a profit of $0.5 million in the fourth quarter of 2001). Net income was $4.6 million or $0.11 per diluted share (compared to a corresponding income of $0.4 million or $0.01 per diluted share in the fourth quarter of 2001).

For fiscal year 2002, revenues were $139.9 million, a 72-percent increase from $81.2 million in fiscal year 2001. The company reported a $19.5 million operating profit compared to a corresponding operating loss of $14.1 million in 2001. Net income was $ 11.9 million or $0.28 per diluted share compared to a loss of $ 13.9 million or ($0.38) per diluted share in 2001.

“We are part of an emerging multi-billion dollar potential market. This market is at the convergence of the computing and communications industries. The telecommunications companies view it as extension of their communications business. The computer vendors are approaching it from an enterprise infrastructure perspective,” said Subrah Iyar, Chairman and CEO of WebEx Communications. Current partners include giants such as AT&T, British Telecom, France Telecom, MCI, SAP, Intuit and Intel.

Iyar said that Microsoft’s acquisition of Placeware has had no ill effect on WebEx, but rather validates the online collaboration market. “Since the Microsoft-Placeware announcement we have received proactive interest from new partners and even existing partners looking to expand their relationship. As a result, our ecosystem of partners can grow very rapidly as this market matures. Similarly, we have received proactive feedback from enterprise customers indicating that they are very concerned about preserving competition in this strategic market, especially given their experience with single-source solutions.”

In the first quarter 2003, WebEx estimates revenues will be approximately $43.5 million. For the fiscal year, the company offered guidance of $200 million for the 2003 fiscal year.

WebEx also announced yesterday that it has entered into an agreement to acquire certain assets and hire employees from three companies in China. All three companies had been performing engineering and other services for WebEx. According to a statement released by WebEx, it is paying approximately $200,000 for the assets.

The assets are being acquired and the employees are being hired by WebEx China, Ltd., a wholly owned subsidiary of WebEx Communications, Inc., with its head office in Shanghai, China. WebEx China will manage the operations at their current locations in Hefei, Hangzhou and Suzhou. Previously, three contract companies manage the separate operations. WebEx reports that the number of employees expected to accept offers will be more than 250.

“By moving these operations into our wholly-owned subsidiary in China,” WebEx achieves more direct control over these critical operations and substantially expands our presence in this important market,” said Iyar.

The three companies are owned by Min Zhu, the president and chief technical officer of WebEx, and his wife.

WebEx is listed by ASPnews as a Top 20 Service Provider.

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