Compuware Shares Jump Despite Lower Profit

Shares of Compuware Corp. (Nasdaq: CPWR) jumped nearly 13 percent in after-hours trading Thursday evening despite reporting a slight decline in profits for its second fiscal quarter ended Sept. 30.

Compuware's net income of 10 cents a share, or $22.7 million, fell within Wall Street's consensus estimate. Net income for the same quarter a year earlier was 12 cents a share or $26 million.

Revenue, however, jumped 15.4 percent year-over-year to $260.7 million, topping Wall Street estimates of $249.5 million.

Compuware closed the regular trading day at 4 p.m. Thursday at $8.85 a share, up 11 cents or 1.3 percent on the day. But by 7:30 p.m. the stock had jumped to $9.97 a share, up another $1.12 or 12.7 percent.

The major reason for the decline in second quarter profits? An increase in costs. The cost of software license fees for the quarter was $4.8 million, up from $3.3 million a year ago. The cost of maintenance and subscription fees was $17.5 million, up from $13.3 million a year ago. Teh cost of professional services was $65.9 million, up from $51.3 million a year earlier. Tech development expenses rose to $26.7 million from $21.9 million a year earlier, and sales and marketing expenses rose to $65.6 million from $56.5 million a year earlier. Total operating expenses were $222.5 million, up from $185 million. The company said the increase stemmed mostly from unfavorable currency translations and the acquisition of dynaTrace.

"Compuware posted a solid quarter in Q2, with strong momentum in all top-line revenue categories," Compuware CEO Bob Paul said in a 5 p.m. conference call with investors and the media. "We're pleased with this level of earnings but we have the opportunity to do much better." Paul added that the company will "apply a laser focus to improving margins" in the future.

During the company's second quarter, software license fees were $61.7 million, up from $45.6 million in the second quarter last year. Maintenance and subscription fees were $128.2 million in the second quarter, up from $122 million in the second quarter last year. Revenue from professional services in the second quarter was $70.8 million, up from $58.2 million in the same quarter last year.

During the quarter, Compuware acquired privately held dynaTrace software in a $256 million cash transaction, allowing Compuware to provide unbeatable insight into the user experience, whether in cloud, complex or traditional environments.

The company also launched Web site performance benchmarks for U.S. automotive mobile sites, U.S. travel Web sites, U.S. health care and insurance Web sites, and U.S. auto and property insurance Web sites. Compuware also launched the Compuware Gomez Application Performance Monitor, a series of reports that will provide impartial data and trend information about the current state of Web, non-Web, streaming, mobile and cloud application performance.

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, using replay pass code 216495. The call is also archived on the investor relations section of www.compuware.com.

For the six months, revenue was $490.7 million, up from $432.4 million in the first six months of the prior fiscal year. Net income was $39.7 million or 18 cents a share, up from $38.6 million or 17 cents a share in the first six months of the prior fiscal year.