Compuware Corp. (CPWR: 8.21 -0.34 -3.98%) reported disappointing results for the first quarter of fiscal 2011. Revenues came in at $206.5 million; down 3.7% from the year-earlier quarter and much lower than the Zacks Consensus Estimate of $216 million. On a product basis, revenues from software license fees came in at $33.3 million, up 4.7% from the year-earlier quarter (excluding divested products).Compuware earlier divested a few of its peripheral products and services (Quality family of products and DevPartner software). The company plans to concentrate on its software business and deliver superior end-to-end application performance, called Business Service Delivery.
Revenues from maintenance and subscription fees came in at $116.8 million, up 9.9% from the year-earlier quarter. Revenues from professional services declined 10.0% year-over-year to $56.4 million. Covisint (Compuware markets its application services under the brand name Covisint) revenues increased 16% year-over-year to $11.2 million as both healthcare and manufacturing verticals show strength.
Operating expenses came in at $184 million, below management’s forecast of $195 million and $200 million.
Net income declined 75.3% year over year to $12.6 million. The net income reported in the year-earlier quarter was positively impacted by $33.8 million from the after-tax gain on the divestiture of the company’s quality solutions business. Earnings per share came in at 6 cents, compared to 21 cents in the year-earlier quarter, and in line with the Zacks Consensus Estimate.
During the quarter, Compuware generated $16.1 million of cash from operations and used $8.8 million in capital expenditures. Compuware repurchased approximately 2 million shares for about $15.9 million. Management targets to repurchase approximately $30 million worth of stock per quarter throughout the remainder of this fiscal year.
Going forward, management feels confident about its business. Maintenance business, the largest business for the company in terms of revenues) remains stable while profitability continues to improve in the Professional Services business. The company has solid partnerships with AT&T (T: 25.54 +0.03 +0.12%) and the American Medical Association.
Compuware expects revenues within the range of $950 million to $1,000 million in fiscal 2011. Operating expenses are estimated around $195 million to $200 million. The company expects to generate $225 million of cash from operations in fiscal 2011. EPS is projected between 48 cents and 56 cents for fiscal 2011. For the second quarter, EPS is projected at 8 cents to 10 cents.
| Overall Summary: |  55%, Bullish 45%, Bearish | Trade Quality: | Upside 60%, Fair Downside 25%, Poor |
| Analysts' Targets | |
| Stifel Nicolaus | $11 |
| Outperform | |
| Thursday, June 10, 2010 | |
| Dahlman Rose & Co. | $10 |
| Outperform | |
| Monday, May 10, 2010 | |
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