To: Clam Clam who wrote (604 ) 5/22/1998 10:48:00 AM From: AlienTech Read Replies (1) | Respond to
MANUGISTICS GROUP INC. (MANU) 47 7/8 CLOSED. The rumors proved to be factual as last night this software company confirmed that its fiscal Q1 results would come up short of market expectations. In fact, this supply-chain management software company expects to report an operating loss in Q1, quite the opposite from the market consensus that expected a gain of $0.13 a share. In the year-ago period, MANU earned $0.09 a share on revenues of $34.2 million. According to Manugistics officials, it expects Q1 revenue and net income to come in below market expectations, although it expects revenue to be "substantially higher" than in the year-ago period. Because the company has entered its quite period ahead of its reporting date, this was about all it could reveal. Given that revenues in the preceding quarter were at $62.1 million, one would expect revenues to easily be above year-ago. Hence, this comment sheds little light on what appears to be a very weak quarter as an operating loss is now being projected by MANU. The fact that the stock has lost more than 20% in the past two days, the operating loss revelation could again put more pressure on the stock as this issue gained 40% last March after it posted better-than-expected results. As we pointed out yesterday, when an issue like Manugistics trades at multiples in excess of 54 times projected fiscal 1999 earnings, there is little room for mistakes. While today's market is willing to reward fast growing companies with a high multiple, it can be brutal on enterprises that fail to deliver the goods, even if its just for one quarter. This looks like a case in which Manugistics was not able to close deals that were crucial to the company making its quarterly numbers. And while MANU may eventually close the sales in the subsequent quarter, it will come too late to salvage the further price correction this issue will most likely experience today.
