Compuware Stock Plunges After Revenue Miss

Stock in Detroit's Compuware Corp. plunged 12 percent in after-hours trading Thursday after the company's fiscal first quarter earnings met Wall Street expectations but missed a bit on the revenue side.

The company's first fiscal quarter ended June 30.

Compuware (Nasdaq: CPWR) reported net income of $12.6 million or 6 cents a share in the quarter, down from $51 million or 21 cents a year earlier. Last year's first quarter net income enjoyed a one-time gain of $33.8 million after taxes on the divestiture of the company's software quality systems business.

Revenue was $206.5 million for the quarter, down from $214.4 million in the same quarter a year earlier.

Analysts polled by FactSet had forecast the software company to report earnings of 6 cents a share on revenue of $216.6 million.

The company reported cash flow of $16.1 million for the quarter and CFO Laura Fournier said Compuware is maintaining its full-year cash flow guidance of $225 million. Fournier said the quarter got the fiscal year "off to a solid start."

Wall Street had a different view. Compuware had closed the trading day at 4 p.m. Thursday at $8.55 a share, up 17 cents or 2 percent for the day. But after reporting earnings shortly after 4 p.m., according to Nasdaq.com, Compuware stock plunged $1.04 a share, down 12.2 percent, to $7.51 in after-hours trading.

During the company's first quarter, software license fees were $33.3 million compared to $31.8 million (excluding divested products) and $40.6 million (as reported) in the first quarter last year. Maintenance and subscription fees were $116.8 million in the first quarter compared to $106.3 million (excluding divested products) and $111.1 million (as reported) in the first quarter last year. Revenue from professional services in the first quarter was $56.4 million, compared to $62.7 million in the same quarter last year.

The company said it intentionally let some low-margin services work go year over year.

COO Bob Paul noted that non-mainframe software sales jumped 44 percent excluding divested products.

"The portfolio is now healthier as we are delivering compellilng and disrupted solutions in high-growth categories," Paul said.

Paul said that sales of Compuware mainframe software "continues to deliver great stability" and that the company was "one deal away from making our mainframe number this quarter."

He said new corporate budget is going to Web application development, which is leading to "shorter sales cycles and bigger deals" for Compuware's Web application performance management software.

License fees for Compuware Changepoint software rose 79 percent year over year, and revenues of its Covisint collaboration technology division rose 16 percent to $11.2 million.

The company reported a stock compensation expense for the quarter of $5.3 million. The company's ttal head count was 4,256 at the end of the quarter, down from 4,275 a quarter earlier and 4,336 a year earlier.

Compuware chairman, co-founder and COO Peter Karmanos Jr. did not speak in the analyst conference call. However, his big salary increase for the year, just disclosed in the company's proxy statement to shareholders, has raised a few eyebrows in the business press.

To listen to a conference call replay discussing the results call (800) 475-6701 in the United States or (320) 365-3844 elsewhere, using pass code 104766. The call is also archived on the investor relations section of www.compuware.com.

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