Compuware sees revenue shortfall

The maker of software for mainframes and distributed systems says it sees fiscal fourth-quarter net income ranging from 15 cents to 17 cents per share, on revenue of $505 million to $515 million.

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Compuware expects to meet the consensus earnings estimate and fall short on revenue in its fourth-quarter report.

After market close Friday, the maker of software for mainframes and distributed systems said it sees fiscal fourth-quarter net income ranging from 15 cents to 17 cents per share, on revenue of $505 million to $515 million. Analyst consensus predicted a Compuware profit of 16 cents per share on fourth-quarter revenue of $548 million.

Shares of Compuware traded at $8.38 in after-hours activity on the Island ECN, immediately following the report. Compuware's stock price fell 13 cents to $9.72 in Friday's regular trading ahead of the news.

Currency effects reduced the company's revenue by $10 million to $15 million, said Joe Nathan, president and chief operating officer. The euro has been weak compared to the U.S. dollar for the last several quarters.

"Foreign currency exchange rates significantly dampened what would have been a solid quarter, given current economic conditions," Nathan said. "But we are pleased with the sequential growth we see in our earnings and distributed product line, evidence that our transition to a transaction-based business model is succeeding."

Distributed license business grew more than 25 percent from the third quarter, Nathan said, during a conference call with analysts.

Overall license revenue in the fourth quarter was $135 million to $140 million, Nathan said. Compuware expects to report maintenance revenue of $110 million to $115 million, and services revenue of $260 million to $265 million.

Compuware sees itself missing First Call's revenue estimate by a total of $33 million to $43 million. About $15 million to $20 million of the revenue shortfall stems from Compuware's reorganization of its services business, Nathan said.

"As we conclude our reorganization of the professional services division, our profitability is solid, and we are confident that this aspect of our operations is now on solid footing and is positioned to grow," he said.

Compuware is the second mainframe and client-server software vendor in as many days to release preliminary quarterly results. BMC Software on Thursday said it expects to meet First Call's consensus earnings estimate, and exceed analysts' revenue estimates. BMC's announcement helped spur Compuware to announce its preliminary results sooner than it has in the past, Nathan told analysts.

A specific forecast for future quarters will be provided when Compuware releases final fourth-quarter results in May, Nathan told analysts. However, he said license revenue is unlikely to increase in the first quarter, compared to the fourth. Earnings per share will increase year-over-year in each quarter of the fiscal year, but overall revenue "probably" would not grow compared to the previous year until the second quarter, Nathan said.