Manugistics Rises 24% After 2nd-Qtr Beats Estimates
Rockville, Maryland, Sept. 22 (Bloomberg) -- Manugistics Group Inc. shares rose 24 percent after the maker of software that links suppliers to manufacturers reported stronger-than-expected fiscal second-quarter earnings yesterday.
Manugistics shares rose 21.13 to 108 in trading of 3.37 million, almost four times the three-month daily average. They have more than tripled this year. The company also agreed to buy closely held Talus Solutions Inc. for about $366 million in stock, to add software that analyzes how to maximize profit.
Manugistics was unaffected by a forecast yesterday from Intel Corp., the world's largest computer-chip maker, that third-quarter sales will be less than projections. That sparked sharp declines in the stock of many technology-related companies. Investors still see value in software companies that specialize in business-to- business electronic commerce, analysts said.
``It's strange that Manugistics has done so well in a market that has done so poorly,'' said Ann Newton, an analyst at William Blair Investment Management, which owns Manugistics shares. ``They had a very strong quarter and reported their first operating profit in two years.''
Excluding a stock compensation charge of $20.7 million, or 72 cents a share, Rockville, Maryland-based Manugistics' net income was $1 million, or 3 cents a share, compared with a loss of $3.4 million, or 13 cents, in the year-earlier period. Sales rose to $58.2 million from $33.8 million. Per-share earnings beat a break-even estimate of nine analysts polled by First Call/Thomson Financial.
`Significant Deals'
Newton, who rates the shares a ``long-term buy,'' said the company beat her sales estimates for licensing and for total revenue. Chief Executive Greg Owens said yesterday Manugistics signed 14 ``significant deals'' in the quarter, or agreements valued at more than $1 million.
Licensing revenue more than doubled in the quarter to $28.5 million from $10.8 million a year earlier. It accounted for 49 percent of Manugistics's total revenue.
The company added customers including Exxon Mobil Corp., Cisco Systems Inc., Texas Instruments Inc. and 3Com Corp. In buying Atlanta-based Talus, Manugistics adds software that helps such companies as airlines and hotels predict customer behavior and adjust prices accordingly to fill seats and rooms. Talus customers include UAL Corp. and Ford Motor Co.
Manugistics software allows customers ranging from General Electric Co. to Harley-Davidson Inc. to plan production and delivery of goods from vendors to customers. Talus had about $40 million in sales in 1999.
``The acquisition is almost perfect for playing to the strengths of Manugistics, and will help them create more demand for their products,'' said Bert Hochfeld, a Josephthal & Co. analyst, who rates the shares a ``buy.''
Newton said the acquisition seems like ``a logical new area to get into,'' but questioned how quickly the software program would be accepted in other industries.
``They are going to have to educate the market better on the benefits of this product,'' she said. ``If they do, it lets them provide one more layer of service.''
Sep/22/2000 17:35 ET |
