BMC Sinks on Results, Outlook

BMC Software (NYSE: BMC) fell US$4.80 to $22.35 in morning trading Wednesday, after reporting fourth-quarter 2001 results that were in line with analyst expectations, but warning that the current quarter is proving slower than previously thought.

On a conference call with investors, BMC executives reportedly lowered their outlook for the first quarter 2002 ending in June, saying they expect earnings per share of 11 to 14 cents, well below the 24 cents expected by analysts.

Analysts at Merrill Lynch and SG Cowen reportedly lowered their ratings on BMC shares to neutral following the news. Merrill had rated the stock accumulate, while Cowen had carried a buy recommendation.

BMC, which is based in Houston, Texas, and has offices around the world, provides software that helps companies do business over the Internet.

BMC said that revenue for the fourth quarter ended March 31st fell 11 percent from a year earlier, to $422.8 million, while earnings before special charges and amortization plunged 47 percent, to 26 cents per share.

Net income was $23 million, or 9 cents per share, down from $98 million, or 39 cents per share.

President and chief executive officer Bob Beauchamp said that he was “pleased” with the company’s “significant progress,” noting that revenue in all divisions was higher than in the third quarter.

“Our strong recovery in the second half of fiscal 2001 provides good momentum as we enter our new fiscal year,” Beauchamp said.

Earlier this month, BMC said that it expected earnings before charges and intangibles of 23 to 25 cents per share on revenue of $412 million to $422 million — at the upper end of previous expectations — due to strong license revenue.

At the same time, however, the company said it would cut about 6 percent of its 7,300 employees. The cuts were to result in a $14 million restructuring charge to first-quarter earnings, BMC said at the time.

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