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Business Objects zips past 4Q forecasts, ups guidance

Business Objects easily hurdled analysts’ estimates in its fourth quarter Thursday and raised its sales and earnings targets for fiscal 2001.

The developer of business intelligent software applications raked in $16.1 million, or 37 cents a share, on sales of $105.8 million.

First Call Corp. consensus pegged it for a profit of 31 cents a share on sales of $100 million.

“They are the steady Eddie or Mr. Dependable of this sector,” said Rob Tholemeier, an analyst at Wells Fargo Van Kasper. “They have a hot product in a very strong, consistent market.”

Tholemeier, who predicted the company would top his estimates, was expecting earnings of 31 cents a share on sales of $98.5 million.

“This is a company that’s growing between 40 percent and 50 percent a year with operating margins at 15 percent and improving by at least a point a year,” he said. “It’s like clockwork.”

The $105.8 million in sales represents a 41 percent improvement from the year-ago quarter when it pocketed $9.5 million, or 23 cents a share, on sales of $74.8 million.

For the fiscal year, Business Objects earned $42.4 million, or 97 cents a share, on sales of $348.9 million up from a profit of $23.8 million, or 60 cents a share, on sales of $241.6 million in fiscal 1999.

“We are very pleased to announce these record quarterly and year-end results,” said Chief Executive Officer Bernard Liautaud in a prepared release. “They show that we are continuing to gain market share against our most direct competitors. Specifically, in North America, we have been demonstrating great momentum, with a growth rate of 65 percent in the fourth quarter.”

In the quarter, Business Objects added another 918 customers including tech heavyweights Hewlett-Packard (NYSE: HWP) and BellSouth (NYSE: BLS).

Liataud told analysts to expect sales of between $95 million to $98 million in the first quarter of 2001 and earnings of between 20 cents a share and 22 cents a share.

First Call Corp. consensus was expecting sales of $96.5 million and earnings of 21 cents a share in the quarter.

For fiscal 2001, Business Objects, which competes with the likes of Cognos (Nasdaq: COGN) and Hyperion Solutions (Nasdaq: HYSL), expects to earn between $1.20 a share and $1.25 a share on sales of between $452 million and $460 million.

Analysts were forecasting a profit of $1.18 a share on sales of $455 million.

Brent Williams, an analyst at McDonald Investments, said he wasn’t surprised that Business Objects raised its estimates for 2001.

“If these IT guys are saying that their budgets are being squeezed, Business Objects’ software is a great tactical investment because it leverages a data asset that they already have,” he said.

Last quarter, Business Objects made $10.2 million, or 23 cents a share, on sales of $86 million.

The stock moved up to a 52-week high of $150.88 in March before falling to a low of $39.94 in January.

Trading at price-to-earnings ratio of 88, the stock is rated either a “buy” or “strong buy” by all 14 analysts tracking it.

Business Objects closed off 13 cents to $72.81 ahead of the earnings report before moving up to $73 a share in after-hours trading.