h&q comments weren't exactly great...but, not exactly bad either...
ROSS Reports Weak March Q Results- In-Line with Pre-Announcement
Ross Systems reported a loss per share of .11 vs. our estimate of .01 earnings per share- largely as a result of an 8% shortfall in software license revenue. The company continues to struggle closing deals as customers defer purchasing new software as a result of Y2K concerns. We remain cautious and maintain our MARKET PERFORM rating.
March Quarter Results
In the march q, ross's total revenue was flat year-over-year at $24.4 mil and 8% below our initial estimate . The3 shortfall is attributable to disappointing licensing revenue, which declined 37% year-over-year to $6.4 mil- well below our $9.0 mil estimate. management cited that a number of deals expected to clo9se this q had been pushed out as customers shift IT budgets for Y2K remediation. we do not anticipate these deals will close anytime soon, given the poor market conditions. On a positive note, services revenue grew 34% year-over-year to $18mil beating our $17.5mil expectation. Despite the upside however, service revenue lags product sales and we expect growth rates to slow until the company is able to regain momentum in software sales.
Total operating expenses of $13.9mil was slightly below oour $14.0 mil estimate. Going forward, thje company expects to reduce expenses by approx. $8mil thru downsizing operational facilities, headcount reductions and new lower cost agreements with 3rd party integrators.
On the balance sheet, cash declined 62% from the dec q to 2.5mil...dso's are up 9 days from last q to 151 days and has been increasing sequentially the last 3qs
outlook
We are not surprised by the companys shortfall given the challenging ERP software market, we remain cautious looking forward. Accordingly, we maintain our MP rating on the stock. Also, we are lowering our fiscal 1999 earnings est from .09 to a loss of .11 and 00 estmates from .23 to .11 |
