Documentum Crushed on Weak Outlook

The shares give up about 17% after the company forecasts a revenue shortfall.
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Shares of content management company

Documentum

(DCTM)

were dropping in premarket trading after the company said it expects second-quarter revenue and earnings to miss expectations.

The company cited delayed government spending and the weak economy. Recently, shares were down $3.35, or 17%, to $16.40, according to Instinet.

Documentum expects total sales to be below its guidance of $72 million to $73 million but up 26% from a year ago to $68 million. The company will announce final results July 17.

In the quarter ended June 30, the company expects to earn a penny a share, compared with last year's loss of a penny a share, under generally accepted accounting principles.

On a non-GAAP basis, the company expects to earn 7 cents a share, which is within its previously stated range of 7 cents to 8 cents a share. The expected earnings exclude the amortization of stock-based compensation and intangibles. Analysts expect the company to earn 8 cents a share on that basis.

"Although we anticipated stronger growth, the challenging economic environment, delays in government spending and inconsistent execution in Northern Asia hindered our progress," said Dave DeWalt, chief executive of the Pleasanton, Calif.-based company.