Macromedia misses its mark
The software developer misses analyst estimates by a wide margin and opts against providing guidance for future quarters. It also says it laid off 200 workers in the quarter.
First Call consensus pegged the Web authoring software developer for a profit of 20 cents a share in the quarter.
Macromedia shares closed up $2.88, or 12 percent, to $26.58 ahead of the earnings report before tumbling to $24.01 in after-hours trading.
The $89.1 million in sales marks only a 3 percent improvement from the year-ago quarter when it earned double the profits--$16.8 million, or 30 cents a share, on sales of $86.4 million.
Chief Executive Officer Rob Burgess said the company initiated cost-cutting measures this quarter in an effort to return operating profits above 20 percent in future quarters.
As part of these cuts, Burgess said the company handed out pink slips to 200 employees, or about 10 percent of its staff, in the quarter, reducing its work force to roughly 1,700 employees. Macromedia previously announced that it would have layoffs, but it did not give numbers.
But he was loath to offer any guidance for the first quarter or the fiscal year despite repeated questions from analysts during a conference call Wednesday afternoon.
"We're not seeing anything dramatic," he said. "We're dealing with very uncertain economic times. We want to make the right long-term decisions. We're sorry (because) the lack of visibility puts you (analysts) in an awkward position. But it's the best thing for our company at this time."
Steven Frankel, an analyst at Adams, Harkness & Hill said the company's lack of guidance wasn't much different from what competitor Adobe Systems said in its most recent conference call.
"It's the same thing," he said. "It's a tough environment right now, and it's tough for them to figure out. I've got some work to do now. I'm doing some soul searching as we speak. But it's always been guesswork."
Other analysts were more candid about the lack of visibility and the company's disappointing results.
Before the conference call began, listeners tuning into the call through the Webcast could hear a pair of analysts--obviously unaware that their comments could be heard--bemoaning the poor earnings and the company's tight-lipped stance.
"They totally crapped the bed," one unidentified analyst said.
To this, the second analyst said: "I just got hosed on this one."
In January, Macromedia announced a $360 million merger with Allaire, a deal designed to bolster its catalog of back-end application development software.
The stock moved as high as $120.88 in July before falling to a low of $13.38 in April.
Nine of the 15 analysts tracking the stock rate it a "hold."