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Autodesk looks for better year to come

After posting earnings in line with lowered targets, the drafting and design software maker says it looks forward to a sales bump from new products next year.

Drafting and design software maker Autodesk said Thursday it doesn't expect any immediate pickup in sales and revenue, after posting quarterly earnings in line with lowered expectations.

For the third quarter, which ended Oct. 31, the San Rafael, Calif.-based company reported a loss of $3.9 million, or 3 cents a share. That compares with a profit of $21.5 million, or 19 cents a share, in the same period a year ago. Sales totaled $188.7 million, compared with $216.4 million a year ago.

Excluding one-time charges, which include expenses related to layoffs still in progress, the company recorded earnings of $5.8 million, or 5 cents a share--a penny ahead of the consensus estimate from analysts polled by First Call.

Autodesk said in a statement that it expects revenue and earnings in the current fourth quarter to be flat, as a weak economy continues to limit business spending.

CEO Carol Bartz said in an interview that the big story for Autodesk will come early next year, when the company begins a string of major product revisions. Plans include a new version of AutoCAD, the company's market-leading drafting software.

Bartz said the software maker expects to see a solid bump in sales from the new products even if current economic conditions persist. But a recovery will be necessary before many of the industries Autodesk sells to, such as commercial-building construction, change their technology spending habits.

"New products do make a difference, but the economy makes a bigger difference," Bartz said. "This is a funny, funny buying time for people...Right now, were being cautious and cautiously optimistic for next year."

Autodesk announced in August that it would lay off 7 percent of its work force--then at around 3,600--by the end of this year. The company had earlier imposed pay cuts for executives and other cost-cutting measures.

Bartz said the layoffs and other cost-cutting moves have positioned the company well for immediate benefit from any economic recovery. "We're lean and mean--any bump in the top line is going to help our profit," she said.

Autodesk is also benefiting from a trend for customers to buy software on a subscription basis, with annual fees that guarantee automatic upgrades. The plan ensures steadier revenue for Autodesk and greater customer satisfaction, Bartz said.

"The customers are seeing the benefit" of subscriptions. "They're getting their hands on features and functionality quicker and more often. Rather than forcing people into a subscription program, we're showing them how it will help their business."