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Manugistics beats 3Q estimates, sees 35 to 40 pct growth in 2002

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Updated 7:55 p.m. ET

Manugistics Group (Nasdaq: MANU) topped analyst forecasts in the third quarter and stuck to analyst expectations for the fourth quarter and next fiscal year.

After market close Tuesday, the vendor of supply chain management software reported fiscal third quarter net income of $3.4 million, or 5 cents per share, excluding a benefit related to stock compensation. First Call's survey of 11 analysts predicted a profit of 3 cents per share for the quarter ended Nov. 30.

Shares of Manugistics, which traded at 44.5 in afterhours activity on the Island electronic communications network, following the release of quarterly results and the accompanying conference call with analysts. Manugistics, which rose as high as 47 in afterhours trading before the analyst call, fell 2.625 to 44.0625 in Tuesday's regular trading ahead of the earnings report.

Company executives set fourth quarter and fiscal 2002 earnings targets in line with current First Call estimates. Manugistics sees earnings of 25 cents per share for 2002, and is keeping to previously stated growth percentages for the fourth quarter, company President Richard Bergmann said, in an interview with ZD Inter@ctive Investor.

Revenue will grow more than 10 percent in the fourth quarter, and 35 to 40 percent in 2002, CFO Raghavan Rajaji said during the analyst call.

"Our pipeline is growing and we have greater visibility than ever before, and market momentum is significantly building," Rajaji said.

Third quarter revenue increased 96 percent year-over-year to $70 million. License fees rose 146 percent to $35.8 million. More than 40 percent of license fees came from eBusiness software, Manugistics CEO Greg Owens said.

"We feel like we're taking market share from all our competitors," Owens told analysts.

Although technology investors have been worried about the economy, Manugistics is not feeling any slowdown, executives said. In bad economic times, demand grows for software designed to increase cash flow and efficiency, Bergmann said.

"We've had a strategy to have a very diversified base across our 11 vertical markets," Bergmann said. "We're not totally dependent on any one market."

Days' sales outstanding -- a measure of revenue yet to be formally collected -- fell to 93 days, after rising to 100 days in the second quarter. Although Manugistics' reserves against accounts receivable increased to $5.5 million from more than $2 million in the previous quarter, that's the natural result of revenue growth, Bergmann said.

"The ratings and the quality of our client base has grown tremendously," he said, adding that the company has added more customers from Fortune 100 and Fortune 250 companies.

Including all items, Manugistics earned $9.4 million, or 14 cents per share in the third quarter.

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