From Briefing.com. Must have relevance for CPQ:
BMC Software (BMCS) 15 5/8: This one caught us completely by surprise. BMCS pre-announced better-than-expected Q3 results after the close last night. The company expects to record Q3 revenues of $345-380 mln and EPS of $0.18-0.20 versus the Street consensus estimate of $0.16 EPS and $355-365 mln revenues. In October, BMCS warned at the time of their Q2 release that Q3 EPS would be in the $0.15-0.20 range, well below expectations of $0.30, since then the Street has come down to $0.16. What is most surprising and encouraging are the implications this news holds for the mainframe market as well as IT capital expenditures on the whole. BMCS sells software for mainframe systems leader, IBM (IBM). The past six quarters have seen BMCS warn to the downside due to weaker-than-expected license revenues, or in other words, a reluctance on the part of enterprises to commit to large IT capital expenditures after strong 1998 and 1999 fiscal years. Over the past few quarters, IBM has posted sub-par results in the mainframe business, and each time analysts pointed to the fact that customers were delaying purchases in anticipation of the new G7 system (zServer) launch. IBM, BMCS, CPWR and CA all rely on mainframe sales and MIPS upgrades for license revenues, so they all have had a hard time over the past few quarters in the software department. Calendar Q3 was supposed to see an improvement, but again the results disappointed. Because BMCS expects to come in at the high end of their October guidance, there is now reason to be optimistic not only for BMCS, their competitors and IBM, but for a recovery in IT spending in 2001. zSeries/G7 shipments are expected to ramp this quarter, and last quarter's dismal performance may well have marked the bottom of the mainframe market. With the FOMC granting a surprise new year's rate cut, and zSeries shipments set to gain momentum, we just got our first preliminary signal that there may be light at the end of the tunnel in the form of a recovery in IT spending. BMCS indicated to open up 4 1/2 at 20 1/8...CA +2 at 23 5/16...CPWR +1 1/4 at 9...IBM unch at 94 5/8. |
