2Q Earnings In
WEDNESDAY, OCTOBER 11, 2000 6:11:00 PM EST
NEW YORK, Oct 11 (Reuters) - Rational Software Corp. RATL, a maker of software used to build other software products that run businesses, on Wednesday reported second-quarter earnings that easily beat Wall Street's expectations on record revenues that jumped 46 percent.
Analysts called it a great quarter and one said it may be a bellwether for the rest of the software industry.
For the quarter ended Sept. 30, the Cupertino, Calif.-based company said fiscal 2001 second-quarter pro forma net income reached $34.6 million, or 17 cents a share, compared with $19.3 million, or 10 cents per share in the second quarter last year. Revenues rose to percent to $187.5 million from $128.2 million.
Analysts had expected the company to earn 14 cents in the second quarter and generate $179.28 million in revenue, according to First Call/Thomson Financial, which tracks earnings estimates.
Shares of Rational Wednesday traded at $57-1/2 in after-hour trading on the Instinet brokerage system, up slightly from its close of $57-3/8. Shares closed up $3 in regular trading before the earnings were announced.
In addition to beating overall revenue expectations, the company said its licensing revenue growth -- a key figure software investors follow -- increase by 170 basis points from quarter to quarter. From the June quarter to the September quarter, the company's licensing revenue to $38.8 million from $37.1 million.
"That's a key number for a software company and that is where software (sale) is," Prudential Securities Inc. analyst John McPeake said. "It could be a bit of a bellwether for rest of software industry."
Pro forma net income excluded amortization of goodwill and purchased intangible assets related to acquisitions as well as net activity incurred by Catapulse Inc., a start-up business-to-business company focusing on the Application Service Provider market for software development tools.
Excluding those costs and contributions, the company reported net income of $19.7 million, or 10 cents a share, versus $19.3 million, or 10 cents a share in the previous year.
Separately, Rational said it made a strategic alliance under which it will add Vignette Corp.'s VIGN content management products for graphics, video and other images to its code-managing products in its Rational Suite ContentStudio.
"It takes the company into areas where it had not much of a presence," FAC/Equities analyst Damian Rinaldi.
(New York Newsdesk, 212-859-1700))
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