($45 up 6) Rational Software's Q3 beats Wall Street estimate (2c)
By Lisa Baertlein
(Adds details, comments, share price, byline, prev
CUPERTINO)
PALO ALTO, Calif., Jan 10 (Reuters) - Rational Software
Corp. (NasdaqNM:RATL - news), a maker of software development tools, on Wednesday posted third-quarter pro forma results that beat Wall Street expectations and increased earnings guidance for the fourth quarter of 2001 and fiscal 2002.
For the third quarter ended Dec. 31, the Cupertino, Calif.-based company said its pro forma net income reached $40.2 million or 20 cents per diluted share, compared with $25.6 million or 13 cents per share in the year-ago period. The company's pro forma results exclude unusual items related to acquisitions.
Wall Street analysts who follow the company, on average, had expected it to earn 18 cents per share in the third quarter, according to First Call/Thomson Financial.
``Developing the software that the world depends on is emerging as the world's most important industry,'' Paul Levy, Rational's chairman and co-founder said during a conference call with analysts.
Rational's products help companies such as Wells Fargo & Co. (NYSE:WFC - news), Microsoft Corp. (NasdaqNM:MSFT - news) and Sony Corp. (NYSE:SNE - news) build software to automate internal processes, create new applications and run video games.
Levy said third-quarter revenue climbed to $215.5 million, up 47 percent from $146.2 million a year ago, after the company posted strong sales in every geographic region and across each product line.
Net income -- including unusual items -- was $26.5 million, or 13 cents per diluted share in the third quarter, compared with $25.4 million or 13 cents per share a year ago.
Rational shares closed up $2-5/16, or 6.28 percent, at $39-1/8. Shares rose to $41 following the after-hours earnings announcement.
SEEING POTENTIAL IN A SLOWING ECONOMY
``Our product development activities are accelerating. We are moving much faster than anyone in our marketplace,'' Levy said, adding that Rational released four key products in the third quarter and expects to close its purchase of private software development company Catapulse Inc. in February.
Levy said the slowing economy presents an opportunity for Rational because its products help customers increase productivity and keep a competitive edge.
``Productivity sells best when times are tough and resources are scarce,'' Levy said.
The company revised its guidance for the fourth quarter of 2001 and fiscal 2002.
Fourth-quarter revenue now is expected to fall between $250 million to $255 million, up from current forecasts for $245 million.
Levy said he was ``comfortable'' with current estimates for fourth-quarter earnings of 22 cents to 23 cents per share.
Rational now estimates that it will earn 85 cents to 90 cents in fiscal 2002, 10 cents more than previous forecasts for 75 cents to 80 cents per share. Revenues are expected to be between $1.1 billion to $1.175 billion. |
