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webMethods Hits the Break-Even Point

Excluding certain items, the B2B company posts a tiny loss, which equals break-even on a per-share basis.

webMethods

(WEBM)

came awfully close to the goal of any Internet-related company Wednesday when it nearly posted a profit.

The Fairfax, Va.-based business-to-business integration software company Wednesday reported a fiscal second-quarter loss of $64,000, which was break-even on a per share basis, excluding certain items. Wall Street analysts were expecting the company to report a loss of 11 cents per share for the quarter, which ended Sept. 30, according to

First Call/Thomson Financial

. That compares to a loss of $6.6 million, or 46 cents a share in the year-earlier period. During the company's conference call, Phillip Merrick, webMethods' CEO, said the break-even results came four quarters ahead of schedule.

Including acquisition and noncash charges, the company posted a loss of $48.8 million, or $1.04 per share.

Last week,

Ariba

(ARBA)

also made quite a hullabaloo over its break-even results on a per-share basis, claiming it was the first B2B company to reach that mark.

webMethods had revenue of $45.7 million, a 193% increase over the $15.6 million it reported for its June quarter. But the company said it actually had only a 30% sequential increase after accounting for its acquisition of

Active Software

, which was completed during the quarter.

It was the smoother-than-expected integration of Active Software into the company that led to its accelerated path to break-even, Merrick said.

TheStreet Recommends

Investors liked the results. Shares of webMethods shot up to $91 on

Instinet

in after-hours trading, after finishing regular trading at $85.

A 30% sequential jump in revenue in itself isn't bad. But other B2Bs, like Ariba and

Commerce One

(CMRC)

, have turned in sequential increases of more than 60%. Analysts, however, said business-to-business integration software, which webMethods makes, is different from the business-to-business procurement software the other companies produce. Integration software helps different companies' computers talk to one another, while procurement software lets companies buy products over the Internet.

"Comparing a webMethods to an Ariba, is not the right thing to do," said Ken Kiarash, an analyst at the

Buckingham Research Group

who rates webMethods accumulate. (His firm hasn't done underwriting for the company.) "That would be like comparing an

Oracle

(ORCL) - Get Oracle Corporation Report

and a

Microsoft

(MSFT) - Get Microsoft Corporation Report

. It's not an apples-to-apples comparison."