Continuus Shares Fall to New Low

Continuus Software Corp.’s stock slumped to a new low Monday after the Irvine firm announced its second-quarter operating losses would be more than triple what analysts expected.

The stock, which has lost almost 80% of its value this year, dropped 81 cents to $2.44 a share in Nasdaq trading. At one point during trading, the shares hit $2.31.

Continuus makes software that tracks changes to computer networks and Web sites. Its troubles demonstrate the ripple effect from a market that has become more tightfisted with money-losing Internet companies, forcing them to pinch pennies, analysts said.

“Many of their clients are dot-coms, and they are buying less,” said Nicholas Pollard, an analyst with H.C. Wainright & Co.

For the three months ended June 30, Continuus is projecting an operating loss of $3.8 million to $4 million, or 36 cents to 38 cents a share. Analysts had estimated the loss at 10 cents a share.

The company said it would record revenue of about $9 million, compared with $8.8 million for the same period a year ago.

Licensing deals are taking longer to close and are 10% to 15% smaller, Continuus Chief Executive John Wark said.

Beyond bargain-hunting, customers also are reluctant to invest in expensive, long-term solutions because software is evolving so quickly, he said.

“They are buying more tactically, solving short-term problems,” Wark said. “We end up competing with lower-end products that have less functionality.”

Continuus is responding to the shift in demand by altering its sales and marketing approach and its pricing, Wark said.

“Investors are definitely saying we need to get on a predictable revenue growth path,” he said.

Monday’s market slide more than reversed gains made last month after Continuus announced a deal to pair its product with International Business Machine Corp.’s widely used VisualAge for Java program. Java programs are central in enabling Internet-based software solutions.

Terms of that deal were not revealed. Wark said the firm’s first products linked to VisualAge for Java would be delivered in the third quarter.