Workstream Finds Some Good News – Sort Of

For the first time in many quarters Workstream (profile; site) was in the money – sort of – eking out a half-million dollar finish to its 2008 fiscal year. The talent management software company reported Thursday evening that it had an EBITDA of $516,000 for the fourth quarter that ended May 31. That compares to an EBITDA of ($4.5 million) for the previous quarter and ($1.3 million) for the fourth quarter last year.

Still, the company reported losing $14.9 million in the last quarter and $39.4 million for the year.

Only sketchy and incomplete numbers were released by the publicly traded company, so it isn’t possible to detail the company’s income and expenses other than to say the fourth quarter revenues were $7 million, up from the $6.2 million of the third quarter.

The company attributed the incomplete financial statement to an “on-going goodwill analysis.” “This item does not have an impact on EBITDA, revenues or cash,” the company noted in the announcement of its financial results. However, goodwill is a business asset that has to be adjusted if its fair value is different from the value carried on the books. Workstream valued its goodwill at $45.3 million in an April filing with the Securities and Exchange Commission. But in the financials it released Thursday appears to be anticipating a reduction of $13.6 million.

Regardless of the eventual accounting decisions, Workstream is a troubled company. Its operating expenses have exceeded its revenues every year since the company went public in 1999 and for two years before that as well. It is very likely to be delisted by NASDAQ, where it trades under the ticker symbol WSTM. To remain on the active exchange Workstream would have to lift its stock price to at least $1. It closed today at 16.27 cents. A planned merger with payroll processor Empagio fell apart in June.

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Still, Chief Executive Officer Steve Purello says in the press release announcing the financial, “Workstream had a solid finish to its fiscal year.”

Purello could not be reached for additional details.

John Zappe is the editor of and a contributing editor of John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.


3 Comments on “Workstream Finds Some Good News – Sort Of

  1. As a veteran of this volatile ASP software industry who remembers the implosion of iSearch back in 2001, the subsequent fall of Personic, and seen a lot of the so-called “consolidations” and infusions of VC funding into the relative newcomers, it remains astonishing to me how many of my competitors are simply not profitable.

    The recent acqusition of Vurv/Vurv Lite by Taleo/Taleo BE was not only surprising, I was shocked to learn from the press release that Vurv (fka Recruitmax/ProHire) was $9MM (that’s NINE MILLION DOLLARS) in debt. Where did all that money go?

    This article about Workstream’s “sketchy and incomplete numbers were released by the publicly traded company” attributed to an “on-going goodwill analysis” must be scary for customers with data hosted by an outfit that admits its “operating expenses have exceeded its revenues every year since the company went public in 1999 and for two years before that as well.”

    Obviously this business is drenched in red-ink (remember when WebHire got delisted by NASDAQ?). No wonder so many ATS tend to over-promise and under-deliver when the sales-quota pressure to get the company out of the holes dug by bad management must be intense.

    The Workstream “good news” hurts us all. Vendors take heed and buyers beware!

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