Compuware crumbles on downgrades, revenue concerns

Shares of Compuware Corp. (Nasdaq: CPWR) crumbled Thursday after the company beat estimates for its first quarter, but was downgraded because of lower-than-expected sales.

In early trading, Compuware was down 8 7/8 to 24 3/4, or 26 percent. The stock was the most active on the Nasdaq.

The downgrades came after Compuware's software licensing growth fell short of expectations, analysts said. CS First Boston, SG Cowen, Goldman Sachs and Hambrecht & Quist all cut the stock from "buy" or "strong buy." Goldman Sachs removed the stock from its "recommended list."

The plunge of Compuware may be a bit of a shock to anyone who read the company's earnings release after the bell Wednesday.

The company topped estimates by 3 cents a share in the first quarter with earnings of $90.7 million, or 24 cents a share. The results were up from $58.8 million, or 15 cents a share, in the same quarter a year ago.

Revenue was also strong at $443.1 million, up nearly 31 percent from a year ago, but short of expectations. Many analysts were looking for sales of about $460 million. Software license fees increased 25.1 percent to $161 million. Software licensing growth trailed the company's maintenance sales, which grew 31 percent to $97.7 million. Services sales jumped 36.3 percent to $184.4 million.

In a statement, CEO Peter Karmanos, Jr. the company could support a 35-to-40 percent growth estimate for fiscal year 2000.

"I'm very bullish regarding the outlook for this fiscal year. Our mainframe and e-commerce-related business continues to grow in a robust manner," he said in a statement.