Lawson Software, Inc. (LWSN) Thursday said its profit for the third quarter increased from the prior year, helped by factors such as lower expenses, lower income tax provision. Revenues, however, declined from the prior year, reflecting weaker business from Consulting and licensing unit, somewhat offset through lower cost of revenues. Lawson also provided earnings and revenue expectation for the fourth quarter of 2009, with earnings expected to be roughly in line and revenues estimates much lower than analyst's expectation.
For the third quarter, GAAP net income of the Chicago, Illinois-based Lawson rose to $7.39 million or $0.04 per share, from $0.73 million or $0.00 per share in the year-earlier quarter.
Results for the quarter include pre-tax expenses of $11.1 million for amortization of acquired intangible assets, restructuring, non-cash stock-based compensation and amortization of purchased maintenance contracts.
Net income was helped by lower provision for income taxes and an 8% decrease in fully diluted weighted-average shares outstanding. Lawson estimates currency fluctuations had a minimal positive impact of less than $0.01 on net earnings per share for the third quarter.
Decreases in research and development, sales and marketing, general and administrative and amortization of acquired intangible expenses, however, were partially offset by $3.5 million of restructuring charges.
On a non-GAAP basis, net income excluding items, was $16.40 million or $0.10 per share, up from $13.74 million or $0.08 per share in the corresponding quarter of the prior year.
On average, nine analysts polled by Thomson Reuters expected the company to earn $0.08 per share for the quarter. Analysts' estimates typically exclude one-time items.
Lawson's revenues for the quarter dropped 18% to $173.85 million from $212.89 million in the same quarter a year ago, below Street estimates of $184.92 million.
In the sequentially preceding second quarter, Lawson's profit increased to $4.21 million or $0.03 per share, though revenue declined 6% to $206.36 million from the same quarter a year ago.
Among others in the industry, Oracle Corp. (ORCL) reported a 1% decline in profit to $1.33 billion or $0.26 per share, as a stronger U.S. dollar ate into the company's sales and profit. Revenues of Oracle were up 2% at $5.45 billion. Redmond, Washington-based Microsoft Corp. (MSFT), in its second quarter reported a profit that declined 11% to $4.17 billion or $0.47 per share, as recession curbed revenue growth. Revenue of Microsoft increased a modest 2% to $16.63 billion in the second quarter.
On a divisional basis, license fee revenues for the quarter under review dropped 22% to $24.88 million, maintenance fee edged down to $85.81 million, while consulting revenues plunged 34% to $63.16 million from the corresponding quarter last year.
Gross margin as a percent of revenues was 52.5%, a slight increase from 52% a year ago as a higher mix of maintenance revenues to total revenues and increases in license fee and maintenance margins offset a significantly lower consulting margin.
Cost of revenues declined 19% coupled with a 19% decline in operating expenses and an 86% decline in net other expense, partially offset by lower revenues and reduced interest income. This in turn reflected a 33% increase in income before taxes.
For the nine-month period, GAAP net income was down 10% at $9.07 million or $0.05 per share, compared to $10.03 million or $0.06 per share in the same period a year ago. On a non-GAAP basis, net income decreased to $41.66 million from $42.00 million in the year-earlier period. On a per share basis, non-GAAP earnings for the period improved to $0.25 from $0.23 a year ago, on a lower share count for the period under review.
Total revenues for period were $571.12 million, compared to $618.90 million in the previous year.
The company expects fourth quarter 2009 GAAP earnings in a range of $0.04 to $0.07 per share and non-GAAP earnings in the range of $0.08 and $0.10 per share that excludes approximately $9 million of pre-tax expenses. The Street currently expects earnings of $0.10 per share for the quarter.
The non-GAAP effective tax rate for fiscal 2009 is anticipated to be 35%, which the company expects to apply consistently throughout the fiscal year.
The company also expects revenues for fourth quarter of 2009 in a range of $175 million to $182 million, while analysts currently forecast revenues of $197.37 million for the quarter.
On November 25, 2008, brokerage Banc of America Sec initiated a Neutral rating on Lawson Software, with mean target price of $6.92.
LWSN closed Thursday's regular trading at $4.68, up $0.32 or 07.34%, on a volume of 2.71 million shares. In after-hours trading, the stock declined $0.03 or 0.29%, to trade at $10.25. In the last-52 week period, the stock traded in the range of $2.71 to $8.78, on a three-month average volume of 1.14 million shares.
For comments and feedback: contact email@example.com