Software selloff boosts Wang
Wang announces net income of $1.81 a share for its first quarter, beating analysts' estimates and spurring its share price.
For the quarter ending March 31, Wang announced a net income of $79.4 million, or $1.81 a share, compared to net income of $5 million, or 20 cents a share, for the corresponding quarter a year earlier.
Excluding the sales gains and charges, the company said it would have reported profits of 12 cents a share, still above expectations.
Wall Street was expecting the company to report earnings of 4 cents a share, according to First Call.
The sale of Wang's software business to Eastman Kodak (EK) for $260 million, a pre-tax gain of $186.9 million, fueled net income.
The quarter's results also included a previously announced $52.2 million charge in connection with the sale of the software business. The company reorganized its ongoing services business around four global service delivery units.
At least one analyst is skeptical.
"It is a really difficult income statement to understand," said Karl Keirstead, an analyst with Lehman Brothers. "With all of the acquisitions and charges in there, it really skewed the numbers, so I'm not sure if it really merits all of the applause that it is getting [on Wall Street]. The stock is already up a buck so far today," he said. The stock was up as high as 17-3/4 in early trading today, up from yesterday's close of 16-1/2.
Revenue for the quarter from continuing operations was $315.1 million, up from $248.3 million for the same quarter last year. Revenue generated from services grew to $246.8 million from $165.6 million; the company said that its new focus is services. Meanwhile, revenue produced from its products dropped to $68.3 million from $82.7 million a year earlier.
The company said that the first quarter began to realize the benefits of ten new multiyear, multimillion-dollar contract awards for network management, desktop services, and outsourcing that were all initiated during the quarter.
During the quarter, Wang said it completed several strategic initiatives to take full advantage of the opportunities in its segment of the IT services marketplace. It cited its alliance with Microsoft (MSFT) through its participation in the Microsoft Service Advantage Initiative.