FileNet’s Spending on R

FileNet Corp. finally is getting its due.

The Costa Mesa business software maker may not have the flashiest executive or products, but it’s been growing sales and profits while other technology companies stumble.

Investors like what they see and have pushed the company’s stock up to its highest level since the bubble days in 2000. FileNet now counts a market value of $1.3 billion.

The catalyst: After recording two quarters of rising sales but falling net income, FileNet turned in an estimates-beating second quarter, with an outlook that topped expectations, too.

“We’re obviously happy with the progress of the company within the last six months,” Chief Executive Lee Roberts said.

Shares of the company are up more than 10% in the past six months,much of that in the past few weeks,while Nasdaq has lost more than 10%.

Roberts said a $300 million bet the company made in 2001 is key to its recent results. FileNet has poured the funds into research and development for what’s called enterprise content management software.

The company previously focused on software that converted paper documents into digital files.

Enterprise content management software involves finding, sorting and retrieving “unstructured” (not digitally captured) documents and “structured” digital documents. That includes the scads of records from Word documents, PDFs and e-mails.

FileNet went a step further, folding in what’s called business process management software,essentially using all the data electronically to automate and speed up transactions, such as a mortgage loan.

The package, P8, now makes up about 90% of FileNet’s sales.

Sarbanes-Oxley ac-counting reform has been a boon to FileNet because it requires companies to provide more oversight and careful recording of transactions.

FileNet recorded a breakout second quarter.

The software maker’s adjusted net profit was $11.1 million, up 28% from a year earlier. Analysts were expecting profit of about $10.1 million.

Sales rose 12% to a record $117.1 million from a year earlier. Analysts expected revenue of $111.6 million.

Big Competitors

FileNet counts big names as customers, including Johnson