MUSE ( $21-$19-$15)sees sales down through Mar 2002
(UPDATE: Updates throughout, adds comments from conference call, previous SAN FRANCISCO)
LOS ANGELES, July 18 (Reuters) Micromuse Inc. (NasdaqNM:MUSE - news), a provider of software that monitors network performance, on Wednesday said fiscal third-quarter earnings more than tripled, but warned sales would drop sharply in the current quarter and remain depressed through March 2002.
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Micromuse forecast that revenues would decline by about 25 percent in the current quarter from the period just ended to between $46 million and $46 million and remain flat near that level for the following two fiscal quarters, pushing the timetable for recovery past March 2002.
For the quarter ended June 30, the company reported pro forma earnings of $10.2 million, or 13 cents a share, compared with $4 million, or 5 cents a share in the year-earlier period. Pro forma earnings excluded amortization of goodwill and purchased intangible assets.
Analysts on average had expected Micromuse to earn 12 cents a share excluding charges, according to Thomson Financial/First Call, with estimates ranging from 11 cents to 13 cents.
The San Francisco-based company said it would cut operating expenses, including some selective reduction of its work force of 800, in order to meet a projection of earnings of 8 cents a share in the current quarter.
Micromuse, which markets a line of software products under the Netcool brand to communications carriers and other companies that rely on their internal networks, said revenues rose 92 percent from a year earlier to $63.3 million.
In a conference call for investors, executives also said deals had become much tougher to close in June as corporate customers deferred or delayed purchases and technology officers became reluctant to go to bat for new investment.
Sales which had previously taken between two to four months to close are now taking up to six months to close, the company said.
``I don't think it was customers holding a gun to our heads for discounts or else,'' Chairman and Chief Executive Greg Brown said on a conference call. ``I think it was that deals required more layers of approval.''
Brown told analysts he sees a return to Micromuse's historical growth of between 9-10 percent from quarter-to-quarter in the second-half of fiscal 2002, calling that a ``conservative'' view.
Including one-time items, net earnings were $7.9 million, or 10 cents a share, compared with $2.4 million, or 3 cents a share, in the year-earlier quarter.
Micromuse increased its reserves for bad debt to about $2 million at the end of the quarter because of the downturn, but executives said no charges were expected for restructuring in the current quarter as expenses are cut.
Brown said that the weakest region relatively had been the U.S., which accounted for about 63 percent of sales, but said he also expected that market would lead Europe and Asia once the recovery begins.
Major customers in the quarter included Global Crossing (NYSE:GX - news) and Cisco Systems Inc. (NasdaqNM:CSCO - news), which e-sells Micromuse Software to service providers, the company said.
Shares of Micromuse closed at $17.49 on Nasdaq, down $2.05, or 10.5 percent, before results were released. In after-hours activity on the Instinet exchange, they recovered briefly but then slipped to $17.20 in reaction to the company's guidance.
Since the start of the year, Micromuse's stock has lost 70 percent, badly underperforming the S&P software index, which was up 10 percent over that period |
