Jonas
NEW YORK, June 19 (Reuters) - The hard-hit software sector
is unlikely to rebound until next year, despite an upbeat
outlook from the world's No. 2 software maker, Oracle Corp.
<ORCL.O>, analysts said on Tuesday.
"There's nothing I heard last night that said to me that
the economic environment is any better than it was before,"
said Melissa Eisenstat, an analyst with CIBC World Markets.
Late on Monday, Oracle reported fourth-quarter earnings
that narrowly beat Wall Street estimates and signaled that
business had bottomed out, boosting hopes that the worst of the
economic slowdown may have passed.
Software stocks, which had been boosted by the rapid growth
of dot-coms, were hit hardest in the first quarter, when the
flagging U.S. economy took its toll on the once high-flying
software sector.
Although a handful of analysts upgraded their stock ratings
for Oracle, most were skeptical that a turnaround for the
broader sector was in sight any time soon.
"We are not out of the woods on the sector yet, given we
are just now entering the earnings preannouncement period for
June quarter companies," Rick Sherlund, an influential software
analyst with Goldman Sachs, said in a note to clients.
Shares of all the leading software vendors were up on
Tuesday,after Oracle's announcement. Oracle itself rose rose
12.94 percent to $16.76. Oracle's arch rival, Siebel Systems
Inc. <SEBL.O>, closed up 9.43 percent to $41.
While Oracle's fourth quarter earnings had been viewed as
an indicator of the overall health of the technology sector,
the vast majority of software companies, including Microsoft
Corp. <MSFT.O> and Siebel, are still to turn in their results
for the current quarter.
"We do believe the June quarter will be a difficult one for
the sector," Merrill Lynch First Vice President Chris Shilakes
said. "It could be quite dismal."
Analysts said that, after conversations with software
buyers, they did not expect a turnaround in the sector until
early 2002.
"I don't see things bottoming out as much as they would
like people to believe...we're still in a trough for a while,"
Teagarden said.
MIXED MESSAGES
Most software companies don't actually know what the June
quarter looks like yet, because many are rushing round trying
to close last-minute deals to meet Wall Street expectations,
said Kaushik Shridharani, an analyst with brokerage Bear
Stearns.
"They have no idea how the quarter is going to turn out and
they're reluctant to encourage any unnecessary hope by saying
anything too early," Shridharani said.
The slow spending environment will shake out the leaders
from the also-rans, who may have a tough time in the future
quarters, said Brent Thill, an analyst with Credit Suisse First
Boston
Software stocks shouldn't experience a blood bath in the
second quarter as they did in the first, Thill added. But he
expressed concern about what the third quarter would look like.
"I don't think everyone's completely out of the woods yet,"
Thill said. "The signals were getting from Europe is it's
slowly deteriorating".
Oracle Chief Executive Larry Ellison also said that
weakness in the U.S market had spread to Europe, where the
company's software license sales were up a mere 2 percent from
the prior year.
Analysts also picked up mixed messages at last week's Bear
Sterns' annual technology conference in New York.
The chief executive of supply chain software firm
Manugistics Group Inc. <MANU.O>, was upbeat, telling analysts
he thought the spending environment had stabilized in the
second quarter. Manugistics is due to report its fiscal first
quarter earnings on Thursday. Shares of Manugistics rose almost
10 percent, or $2.95, to close at $9.54.
Down the corridor, however, concerns that Micromuse Inc.
<MUSE.O> would miss its third quarter numbers sent the stock
tumbling as much as 20... |
