Vignette and Interwoven have released their second-quarter 2008 results, and it's a study in contrasts.

With Interwoven, the news is essentially all good. License revenue for the quarter was up 11 percent (to $23.4 million) over the same quarter a year ago, while service and support revenue grew 18 percent. Overall, gross profit jumped a solid 16 percent in Q2 2008 versus Q2 2007. First-half gross profit was likewise up 16 percent year over year. Net profit soared 78 percent (Q2 2008 vs. Q2 2007), and on a six-month basis the year-over-year jump was 53 percent.

Certainly some of the top-line revenue growth came from recent acquisitions, but any way you slice it, those are some pretty impressive numbers.

Vignette, meanwhile, continues on its sad downward trajectory. The company saw license revenue fall to $9.9 million for Q2 of this year, from $14.6 million in the same period last year. Services actually grew slightly, however (to $35.8 million from $33.4 year-ago). Gross profit was similarly down. But more ominously, net income went negative. The company reported a loss of a little over $863,000 in Q2 of this year, compared to a net gain of $4 million in Q2 of 2007.

What makes the Vignette story so sad is that the firm does not lack for talented people (nor technological vision). What's lacking is an ability to land new deals at the kind of rate that will stop the financial bleeding. It's also a matter of battling ASP (average sales price) deterioration.

We've been seeing indications for some time that Vignette is under strong pricing pressure. In the recent earnings call (transcript available at SeekingAlpha.com), CFO Pat Kelly may have unwittingly provided a valuable data point on this. He notes that Vignette's ASP was $211K in Q2, versus $249K in Q1. (He ascribed the difference to "normal volatility in that metric.") The problem with averages, of course, is that a single abnormally high value can sway the overall average upward, giving a potentially misleading result. (This is why people often use median values rather than averages.) Tellingly, Kelly noted that Vignette scored three large deals in excess of $1 million during Q2. It doesn't take a math genius to see the implication of this. Quite simply put: It means the majority of Q2 deals came in at less than $211K. Maybe far less.

Headcount reduction is usually the first tactic a company resorts to when attempting to arrest a downtrend in profitability. But ironically, headcount-trimming costs money in the near term. (It's not unusual for personnel-related "restructuring" costs to come to $50K per employee.) In the course of the earnings call, Vignette's Somesh Singh, SVP of R&D and Technical Operations, verified that a charge of $2.5 to $3 million would probably be taken soon, due to severance costs.

Other Vignette executives hinted at re-allocating resources internally. As ECM Suites Report readers know, Vignette sells a broad line of different tools. Attention will surely shift internally, though it's too soon to know exactly how.

We'll keep you posted.