Analysts Upbeat on Enterprise Software
Monday July 2 3:07 PM ET
<<PALO ALTO, Calif. (Reuters) - While investors brace for earnings warnings on the recently completed second quarter, analysts on Monday issued cautiously upbeat comments on enterprise software makers.
``Within our group, we are not expecting any pre-announcements,'' Lehman Brothers analyst Neil Herman wrote in a note to investors.
Herman covers Oracle Corp. (NasdaqNM:ORCL - news), Siebel Systems Inc. (NasdaqNM:SEBL - news), PeopleSoft Inc. (NasdaqNM:PSFT - news), Veritas Software Corp. (NasdaqNM:VRTS - news) and other companies that sell products to automate business processes and to store and manage data.
Within the broader software sector, e-commerce players Commerce One Inc. (NasdaqNM:CMRC - news) and Art Technology Group Inc. (NasdaqNM:ARTG - news) already have confirmed investors fears -- both have issued notice that their quarterly results would fall short of previous forecasts.
While executives at Oracle, the world's second-largest software maker, recently said they thought the worst was over and that several large corporate deals that crumbled in previous months were being revived, Herman said enterprise vendors are not yet out of the woods.
Continued softness in the United States and weakening conditions in Europe are an ongoing concern, said Herman, who predicted that some enterprise software companies could lower guidance during their second-quarter earnings calls in late July.
``We also are expecting that the September quarter is likely to be quite tough for the sector as a whole,'' Herman said.
SOFTWARE A MIXED BAG
Shares of enterprise software vendors were mixed in late trading on Monday.
Sales and customer service software maker Siebel Systems saw its stock rise $3.30, or about 7 percent, to $50.20 after Merrill Lynch analyst Craig Wood boosted his rating to accumulate from neutral.
In a note to clients, Wood said he believed the firm's second quarter sales targets were on track.
``Although the market is far from fully recovered, the pendulum appears to be swinging back in Siebel's favor, particularly as expectations have been ratcheted down,'' he wrote.
Wood said his forecast for earnings of 14 cents a share was within reach. That estimate is a penny higher than analysts' consensus, according to Thomson Financial/First Call.
Elsewhere, Oracle was slightly higher while Veritas and PeopleSoft were trending lower.>> |
