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Compuware Revenue, Profits Dip

DETROIT (WWJ) -- Revenue and profit both fell last fall at Michigan's biggest tech company, Compuware Corp. (Nasdaq: CPWR). Net income in the third fiscal quarter ended Dec. 31 fell to $25 million or 11 cents a share from $25.3 million or 12 cents a share a year earlier. Revenue came in at $250.5 million, down from $257.9 million a year earlier.

The earnings met analyst expectations of 11 cents a share, according to the website Wall Street Cheat Sheet.

For the nine months, net income was $51.3 million or 23 cents a share, up from $46.4 million or 21 cents a share a year earlier. Revenue was $706.1 million, up from $704.6 million a year earlier.

Among components of revenue in the quarter, new software license fees were $56.7 million, down from $64.8 million a year earlier. Maintenance fees were $101.6 million, down from $102.3 million a year earlier. Subscription fees were $21.7 million, up from $20.8 million a year earlier. Professional services fees were $46.4 million, up from $46 million a year earlier. And application services fees were $24.1 million, up from $23.9 million a year earlier.

License revenue in Compuware's fast growing application performance monitoring segment was up 17 percent year over year, and the APM segment contributed to the company's revenues at a record clip of 20 percent. DynaTrace showed a 54 percent increase in bookings, 135 percent in Europe, the Middle East and Africa.

Mainframe revenue, Paul said, was a victim of "lumpiness," a few deals that slipped into the fourth quarter that were expected to close in the third.

Total company employment was 4,357 as of Dec. 31, down from 4,579 a year earlier.

Compuware also announced it planned to cut expenses from $110 million to $120 million by the end of fiscal 2015, up from an earlier estimate of $80 million to $100 million.

Compuware also reported so-called "non-GAAP" net income fo $38 million or 17 cents a share, up from $32.3 million or 15 cents a share in the same period a year earlier. This profitability yardstick excludes the cost of stock options provided to executives, amortization of purchased software and intangible assets, restructuring charges, advisory fees associated with disputes with shareholders, and the tax impacts of those items.

In a conference call with analysts and journalists, CEO and president Bob Paul said: "We have made substantial progress toward the completion of the transformation of Compuware. The remaining elements of this pject will be completed by the end of our next fiscal year. The resulting company should be one of greater and more consistent growth and dramatically improved margins. "

The company announced earlier this month that it would sell its Changepoint project management software, its Uniface mainframe application development software, and its professional services businesses to a California private equity firm. Paul told analysts Compuware plans to net $100 million of the $160 million purchase price after expenses. He said the company expects "substantial, double digit" growth in profitability after the divestiture.

To listen to a replay of a conference call discussing the results, call (800) 475-6701 in the United States or (320) 365-3844 elsewhere. The replay passcode will be 312917.

Before the market close, traders liked Compuware, boosting its stock up 3 cents a share on the day to $10.55 a share on a day when the overall market tumbled. After hours, the stock barely budged, up a penny to $10.56 in light trading.

Also reporting earnings Thursday was Covisint Corp. (Nasdaq: COVS), still 80 percent owned by Compuware since the public offering of 20 percent of its stock last year.

In the third quarter of its fiscal year, which ended Dec. 31, revenue was $24.1 million, up from $23.8 million a year earlier. The company's net loss was $8.3 million or 22 cents a share, worse than a loss of $149,000 or a penny a share a year earlier, due to major increases year over year in research and development spending, sales and marketing expenses, and general and administrative expenses.

On the bright side, Covisint said, revenue in the subscription and support segment rose 21 percent year over year to $17.6 million.

For the nine months, Covisint revenue was $72.7 million, up from $65 million a year earlier. The loss was $25.7 million or 79 cents a share, worse than $2.4 million or eight cents a share a year earlier. Again, much higher R&D, sales, marketing, and administrative expenses were the culprit.

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