Manugistics Remains Bullish (AMR Research)
In contrast to the general trend of missed revenue and
profit targets, Manugistics remains bullish on its
performance in 2001. The fundamentals appear to support
this confidence.
Earnings shortfall news has been circulating around software
and high-technology companies for weeks, but countering the
trend is Manugistics. Trying to avoid getting swept into
the downward spiral, the supply chain vendor announced it
intends to report record revenue for its fourth quarter and
fiscal year (ended February 28), and further indicated no
changes in guidance for performance in upcoming quarters.
Manugistics' Chairman Greg Owens said he sees "strong,
robust market demand" for the Manugistics applications. Is
this a bold marketing ploy? AMR Research thinks not, since
signs still point to high customer interest in supply chain
applications. There are, however, issues of timing of
purchases, which are part of the current economic reality
that companies must deal with in a slowing, inventory
overburdened economy.
Behind Oracle's recent announcement that it would fall short
of expectations, is some indication of a healthy increase in
applications sales, but a negative trend in database sales.
Other supply chain vendors are touting continued customer
interest, while others still report customers pushing back
the timing or scope of purchases. The Manugistics
announcement is supported by some fundamentals. First,
Manugistics has exceeded earnings estimates for the past
five consecutive quarters, restoring its credibility with
Wall Street and the investment community. Second, there is
the acquisition of Talus Solutions, whose revenue began to
impact Manugistics' overall results. And finally, there is
the multi-year agreement with the U.S. Defense Logistics
Agency, an ongoing annuity revenue stream for Manugistics.
The U.S. government tends to not postpone a buying decision,
once it is made. While none of us, except perhaps the
Federal Reserve, can accurately predict what direction the
current economy will take, the Manugistics story remains a
good one.--Bob Ferrari |
