[Or Yehuda, ISRAEL] Magic Software Enterprises (MGIC)
said fourth quarter revenue and earnings will be below the company’s previous
expectations, and its top executives will step down.
Revenues are expected to be approximately $23 million, with an estimated net
loss of $6 million. The company said half of the costs will come from
non-recurring restructuring charges as the company moves into new lines of
business and its top executives leave.
Magic chief executive Jack Dunietz and president Israel Teiblum will leave
the company at the end of this year. Magic Chairman Dan Goldstein will
The changes are being factored into fourth quarter restructuring charges. The
company said it will provide details of the restructuring charges when it
announces fourth quarter results in early February.
The company said the lower expectations represent the current economic
outlook, as well as the slowdown in corporate IT spending.
“Like many other technology companies, the current weakness in worldwide
economic conditions, coupled with a slowdown in corporate IT spending, has
had a negative impact on Magic’s results,” Goldstein said. “Many deals have
been postponed until 2001 while companies reassess their own spending in
light of the current market. We are quite confident that these deals will be
realized in the coming quarters.”
Goldstein said in his statement that because solutions carry higher price tags,
companies often will prolong the decision-making process until they have
explored and exhausted every available option.
“This can move the purchase decision from one quarter to the next,” he said.
“The mere fact that these are more considered decisions means that, if even
one deal is lost or delayed, there is very little room to replace it with other
business during any single quarter.”
Still, the company said, it remains confident that its long-term outlook is
favorable. According to Magic, it has been receiving positive reviews from
customers for its new product releases and is making significant progress in
restructuring its management. The company has appointed new corporate
vice presidents for sales and professional services.
Magic, part-owned by Israel-based Formula Group (FORTY), develops,
markets and supports software development and deployment technology that
enables enterprises to accelerate the process of building and deploying
applications that can be rapidly customized and integrated with existing
systems. The company’s North American subsidiary is in Irvine, Calif.
Parent company Formula is an information technology holding company. See
our previous story about Magic Software. Click here.