- The Washington Times - Monday, February 27, 2006

Convera Technologies signed its first commercial customers this month for its service that indexes the content of the Internet and delivers it in a customized format.

The biggest of three contracts was with HighBeam Research, an Internet research engine. It represents a milestone as Convera moves beyond its early development stages.

The others were with CNET Networks, a provider of interactive Internet content, and Vivisimo, a clustering search software venture.

One of its top products is its Excalibur Web Index and Search service, which retrieves information from both the Internet and internal databases and places it into a format chosen by the customer.

“The announcement of Excalibur as a ‘live’ service this past fall was the culmination of two years of massive development,” said Pat Condo, chief executive officer of the Vienna, Va., company. “During that time, we shifted many resources to the project and risked everything on its completion and success. We are very pleased with our current position.”

Industry analysts agree that Convera has developed a good product with Excalibur, but wonder how long the company can hold on to its niche.

“I think Google is a competitor,” said Sapna Satagopan, research analyst for JupiterResearch, a New York corporate research firm that has no business affiliations with Convera. Google has”a fairly established brand and they’re starting to pay more attention to enterprise searches.”

For Convera to succeed, “they have to establish their relevancy,” Miss Satagopan said. “They would have to look at more features and look at the quality of the result.”

Convera was organized in 2000 from the merger of Excalibur Technologies and Intel Corp.’s media division. It operates with about 200 employees.

So far, it has sold its products primarily to government defense and intelligence markets in 16 countries.

Major investors are Allen & Co., Legg Mason and Ashford Capital.

Convera said its preliminary results for the fourth quarter of fiscal 2006, which ended Jan. 31, show revenue of $3.6 million, compared with $6.3 million in the same period one year earlier. Fiscal 2006 revenue is expected to be $21 million, compared with $25.7 million last year.

The net loss for the fourth quarter is expected to be about 20 cents per diluted share, compared with a net loss of 9 cents per diluted share one year earlier.

Its stock closed at $10.09 per share yesterday on the Nasdaq Stock Market, up 14 cents, or 1 percent.

Mr. Condo said the company invested much of its resources in the fourth quarter into marketing its Excalibur products.

The project put a strain on the company, he said.

“Investing in our new Excalibur product line of Web searching products and applications is expensive and requires rapid development of technology and substantial hiring of qualified staff,” he said. “This put a strain on our organization as it changes both culturally and financially.”

A year ago, Convera laid off about 20 percent of its work force while it focused on its Web indexing project.

Mr. Condo predicts that the company’s fortunes are changing.

“The investment is now shifting toward execution,” he said. “We’ve moved beyond where we were to a whole new company.”

The company controlled cash and investments of $37.8 million as of Jan. 31.

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