Compuware Profit Falls, But Meets Expectations

Compuware Corp. said late Thursday that its profit declined in the second fiscal quarter ended Sept. 30, to $26 million or 12 cents a share, from $28 million or 12 cents a share, in the year-ago period.

Revenue rose 3.6 percent to $225.9 million from $217.9 million last year.

Analysts surveyed by FactSet Research had estimated a quarterly profit of 12 cents a share on revenue of $225 million.

The per-share number is the same despite the lower profit because Compuware has been actively buying back its stock in recent years. The company had 224.4 million shares outstanding during the quarter this year, vs. 236.1 million shares a year earlier.

Investors seemed pleased with the results. Compuware closed the day before the announcement at $8.82 a share, up 9 cents or 1 percent for the day. In after-hours trading, after the announcement, Compuware shares jumped 43 cents or 4.9 percent to $9.25.

During the company's second quarter, software license fees were $45.6 million, down from $50.1 million in the same quarter a year earlier. Maintenance and subscription fees were $122 million in the second quarter, up 11.2 percent from $109.7 million in the second quarter last year. Revenue from professional services was $58.3 million, up slightly from $58.1 million in the same quarter last year.

For the nine months, total revenue was $432.4 million, up from $432.3 million a year earlier. Software license fees were $78.9 million, down from $90.7 million a year earlier. Maintenance and subscription fees were $238.8 million, up from $220.9 million a year earlier. And services revenue was $432.4 million, up from $432.3 million a year earlier.

Compuware said sales of its software for non-mainframe application was up 53 percent from the second fiscal quarter a year earlier. Included was 26 percent increase for application performance management -- Vantage and Gomez -- to $51.4 million. Revenue at the Covisint secure collaboration technology subsidiary was up 27 percent from a year earlier to $12.2 million.

"Compuware has shaped its business to deliver steady, long-term growth in revenue and earnings," Compuware president and COO Bob Paul said in a statement. "This quarter's results show clearly that we're delivering on that goal. Total revenues are up compared to Q2 last year, with strength in our growth businesses overcoming a difficult compare in mainframe revenues."

In a conference call with analysts and journalists, Paul said this was a difficult quarter to beat for Compuware's mainframe business, because last year's second quarter included a single large mainframe contract with a government agency.

Paul said that for the entire fiscal year, Compuware expects total earnings of 48 to 56 cents a share, and revenue of $950 million.

During the quarter, the cost of maintenance and subscription fees and sales and marketing both rose -- the former by 59 percent to $13.3 million from $8.4 million, the latter by 11 percent, to $56.5 million from $50.8 million -- which caused profits to decline.

Other operating expenses during the quarter were comparable or declined.

To listen to a replay of the conference call discussing the results, call (800) 475-6701 in the United States or (320) 365-3844 elsewhere.. The replay passcode will be 170179.

There will also be a recording at www.compuware.com.

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