Stock Watch: BMC Ends Lower as Q2 Revenue Drops

BMC Software, Inc. (Nasdaq: BMCS) fell 13/16 to 17 5/8 Wednesday after the e-commerce software maker reported lower revenue and earnings for the second quarter ended September 30th.

BMC said revenue for the quarter fell 22 percent from a year earlier to $323 million, while earnings before charges dropped 75 percent to $27.9 million, or 11 cents per share, in line with analysts' estimates. The company posted a net loss of $12.5 million, or 5 cents per share.

"We continue to see a reluctance among customers to commit to large enterprise license transactions, as the mainframe market remains soft," said chairman, president and chief executive officer Max Watson. The company, he said, is adjusting its business model to the market reality.

BMC warned of the shortfall earlier this month, saying not enough customers were willing to commit to large enterprise transactions. The company's shares are down from a 52-week high of 86 3/4, reached in January. The shares set a low of 13 on October 4th, the day the company warned about the second-quarter revenue shortfall.

License revenue dropped 38 percent from a year earlier, led by a 53 percent decline in North American demand. International license revenue dropped 7 percent. Analysts at ABN Amro and CIBC World Markets reportedly downgraded BMC shares following the report.

Prudential Securities lowered its 12-month price target for BMC to $12 from $17, saying the company is suffering from a new pricing plan from IBM (NYSE: IBM) that lets customers pay for software capacity they actually use, rather than buying software capacity outright.