Oscar Gruss predicts BackWeb will stage a comeback in the second half of 2001

Despite disappointing income figures, the firm gained 100 new clients in Q4
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The fourth quarter was not an easy one for

BackWeb

(Nasdaq:BWEB). Not only did it face a general downturn in the market, but the company also released an earings warning. A report by investment house Robertson Stephens shows that BackWeb is in a weak position.

Analysts Alex Baluta and Mark Perutz have lowered their BackWeb estimates for the current year.

In its previous quarter, BackWeb reported an income of $7.1 million, meeting the guidance it had given to analysts. But the figure was still a major disappointment, as before the firm's warning, analysts had expected a quarterly income that was 85% higher.

Loss per share came to 12 cents, also within the warning's range. But it was still a painful blow for Robertson Stephens, which had been hoping that BackWeb would break even in its fourth quarter.

Robertson Stephens maintains BackWeb's Attractive rating

Despite its difficulties, BackWeb's customer base grew by 100 clients in the fourth quarter. The company renewed a $9.2 million OEM agreement with

SAP

, which should be reflected in BackWeb's financial results for 2001.

Because of an expected drop in demand for BackWeb's push technology, analysts are changing their income and earnings forecasts for 2001. They predict revenue of $50.2 million and a loss per share of 18 cents. In their previous analyses, analysts had hoped for $76.9 million revenue and a net gain of 20 cents per share.

But Robertson Stephens still believes in BackWeb and its technology, rating the company Long Term Attractive.

Oscar Gruss says company base is strong

Oscar Gruss has retained its Outperform recommendation for BackWeb but has lowered its price target to $6, still 45% higher than BackWeb's opening share open price today. Analyst Rami Rosen explains that the company has suffered from a spate of order cancellations from some of its key customers.

Rosen says that today, BackWeb is focusing on smaller deals. The company's management has also reported that demand for its technology from small and medium-sized firms is increasing. BackWeb is also set to enter the electronic customer relationship management sector, through a joint arrangement with the

IBM Corporation

(NYSE:IBM).

Rosen believes that BackWeb's core technology and applications and business strategy are sound, and can propel a comeback in the second half of 2001.

Rosen points out that BackWeb is not expected to reach profitability before the last quarter of 2001, hence the firm will report losses of 20 cents for the coming year. Rosen defines BackWeb as a financially sound company suffering from a sales slowdown. But he remains optimistic that the firm will be able to rely on its own financial resources to stage a swift recovery.