Updated from 4:41 p.m. ET

The understated press release title said it all: "

BroadVision

(BVSN) - Get BroadVision, Inc. Report

Reports Results for Fourth Quarter 2000."

No words like Beats, Accelerates or Record Results, which basically translates into: Boy, Did We Blow This One. Can You Ever Possibly Forgive Us?

The Redwood City, Calif., Internet personalization software company, missed the Street's fourth-quarter earnings expectation, and analysts anticipate a rough 2001 for the firm.

After the close of regular trading Thursday, BroadVision reported income excluding items of $4.5 million, or 2 cents per share, on $136.9 million in revenue. Analysts were expecting the company to report 5 cents a share on $133 million in revenue, according to

Multex

. A year earlier, the company earned 3 cents per share on revenue of $43.7 million, representing a 213% sales increase over the last 12 months.

During the regular session Thursday, shares of BroadVision ended off $2.06, or 12%, at $14.88. In after hours trading, the stock continued to fall, hitting $12.18 on

Island

.

A Feat

The company attributed its feat of posting lower earnings on higher sales to the fact that costs increased more than it anticipated. Additional hires, higher compensation for its sales force, and duplicative costs in getting new hires up to speed all contributed to those extra expenses.

"We did make some forecasting errors early in the quarter," said Randy Bolten, BroadVision's CFO.

Brent Thill, an analyst with

Credit Suisse First Boston

who downgraded BroadVision to buy from strong buy in December, said the quarter was broadly off the mark.

"This was clear underperformance to what the Street was expecting," Thill said. "They're clearly a company in transition." (His firm hasn't done underwriting for the company.)

The Jump

Part of that transition came with a big jump in sales and marketing expenses related to a new release of BroadVision's software. Thill, for instance, was looking for the company to spend $45.8 million on sales and marketing. Instead, it spent $62.4 million.

Bolten, the CFO, also indicated that internal spending was higher than expected, largely due to the company's torrid hiring pace. It added more than 1,600 people in 2000, though Thill points out only 294 hires came in the fourth quarter. The company said it made 1,000 hires between April and September, with costs for those hires hitting in the fourth quarter. Total headcount, the company said, grew to 2,275.

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"This growth put pressure on our internal processes that resulted in an overrun in our internal expenses," Bolten said. He added that there was some "duplication in costs" in that hiring, and that those "inefficiencies resulted in $2 million to $3 million in increased expenses."

None of that was welcome to Wall Street, which is more fond of companies becoming more efficient these days.

Looking Ahead

As with all earnings reports this season, though, it's the outlook matters, and BroadVision left its guidance alone. Analysts, however, don't see things shaping up too well for BroadVision. They cite competitor

Vignette's

( VIGN) recently lowered guidance, some customer losses to

Art Technology Group

( ARTG) and a sea change in the spending environment as reasons.

"The next six months are going to be a lot more challenging," said Thill. "They're just going to be in more difficult waters going forward. The water's were so clear for so long that it was full speed ahead. But that's all changed now."

In contrast, Thill pointed to the generally positive outlook of companies like

i2 Technologies

( ITWO) and

Manugistics

(MANU) - Get Manchester United Plc Class A Report

, which sell software that helps companies operate more efficiently. Suddenly, with a slowing economy and shrinking technology spending budgets, that software becomes a lot more important than BroadVision's technology, which helps customers have a more compelling experience on the Web.

The Shift

"There's been a shift in priorities, and BroadVision's products have dropped a couple of layers," Thill said.

William Chappel, an analyst with

Robinson-Humphrey

who rates BroadVision an outperform, had a similar view.

"My concern is not just for BroadVision in particular, but the whole e-commerce personalization software sector," Chappel said. "Are the solutions that BroadVision and Vignette offer, are they on the front burner, or are they easily pushed back in an IT spending slowdown? That may be the case." (His firm hasn't done underwriting for the company.)

BroadVision said it was confident it could keep costs down in the coming year, though it did acknowledge how challenging the new atmosphere in technology spending would be.

"The current economic environment will present challenges to every company this year," said Pehong Chen, BroadVision's CEO. "BroadVision is well positioned not only to survive, but to thrive."

By the way its stock sold off after hours, however, investors seem less sure.