A Deal Struck With Sprint PCS Helps Software.com Shares Rise
By LISA BRANSTEN
THE WALL STREET JOURNAL INTERACTIVE EDITION
Enthusiasm for the future of wireless messaging technologies helped send shares of Software.com higher Tuesday.
In Nasdaq Stock Market trading, shares of the company rose 8 3/4, or 29%, to close at 39, after the Santa Barbara, Calif., company announced it had signed a deal to license its Internet-communication software to Sprint PCS Group.
Meanwhile, technology shares advanced. The Nasdaq Composite Index advanced 25.95 to close at 2671.23 and Morgan Stanley's high-tech 35 index rose 1.43 to 1167.82. The Dow Jones Internet Index gained 8.66 to 212.79.
Software.com, based in Santa Barbara, Calif., makes software that manages messaging services such as e-mail for Internet-service providers and Web sites. The company manages 47 million mailboxes for such partners as Excite At Home and AT&T's WorldNet Internet service.
Although the company, which went public at the end of June, has said for some time that it intended to enter the wireless arena, the Sprint deal is its first deal with a wireless carrier.
John Ingalls, Software.com's chief financial officer, said the deal shouldn't affect analysts' earnings expectations since the agreement was inked last spring and the company gave analysts guidance to include the projected revenues in their earnings models. Terms of the contract weren't disclosed, but Mr. Ingalls said it was a multiyear, multimillion-dollar deal that should generate revenue for the next 10 quarters.
Banc Boston Robertson Stephens, the only firm that has given an estimate to First Call/Thomson Financial, forecasts that Software.com will have sales of $37.5 million this year and a loss of 41 cents a share. For next year, Robertson expects revenues of $55.9 million with a loss of 25 cents a share.
Kirsten Campbell, an analyst at Merrill Lynch & Co., said revenues from the deal had been factored into her estimates for the company but added that the deal was important because "it validates their product to have a big customer like Sprint using it."
Mr. Ingalls said he expects wireless deals to make up a "substantial" portion of the company's revenues by next year.
"This is very much a repeatable solution and having sold it to Sprint we hope to sell it to other wireless telephone companies," he said. He added that the stock may have moved Tuesday because investors see that wireless messaging is a technology that is gaining ground quickly.
"Maybe it surprised people that this is not a year from now," he said. "We're very much here today with a technology that works today."
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--Paula L. Stepankowsky of Dow Jones Newswires contributed to this article. |
