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Compuware Corporation (CPWR - Analyst Report) posted earnings per share of 12 cents in the fourth quarter of fiscal 2012, compared to 16 cents in the year-ago quarter and 10 cents in the previous quarter, in line with the Zacks Consensus Estimate. Net income came in at $27.1 million versus $34.8 million in the previous year quarter and $21.6 million in the last quarter.

In fiscal 2012, earnings per share were 40 cents versus 48 cents in fiscal 2011. Quite a few investments were made during the year which pulled down the overall net income for the company after accounting for the dynaTrace acquisition’s financial effects.


Total revenue for the quarter came in at $266 million, rising 6.6% year over year and 5.1% sequentially. This beat the Zacks Consensus Estimate of $262 million.

Software license fees came in at $67.9 million, surging 21.9% year over year. Maintenance and subscription fees were $124.9 million, marginally up 0.7% annually.

Revenue from professional services in the fourth quarter was $51.8 million, down 1.5% from the previous year period. Application services revenues increased 24.4% year over year to $21.4 million.

For fiscal 2012, net revenues were $1.0 billion, increasing 8.7% from fiscal 2011.


Operating income totaled $36.3 million, falling 3.5% from the previous year quarter. Operating margin declined to 13.6% from 15.1% in the previous year quarter but increased marginally from 12.9% in the previous quarter.

Operating margin for fiscal year 2012 came in at 12.5% versus 16.2% in fiscal 2011. The decline was attributable to costs accruing from the dynaTrace acquisition. Effective tax rate was 31.1% for the fiscal year.

Balance Sheet and Cash Flow

Exiting fiscal 2012, cash and cash equivalents amounted to $99.2 million rising from $82.2 million in the last quarter. Long-term debt dropped to $45 million from $110 million at the end of the previous quarter.

Cash flow from operations for fiscal 2012 came in at $179.6 million versus $160.0 million in fiscal 2011. Capital expenditures for the fiscal year amounted to $19.3 million.


For fiscal 2013, management projects revenues to fall within $1.07 billion - $1.08 billion along with earnings per share of 45 cents – 49 cents. This denotes a 7% surge in total revenue and an 18% increase in earnings compared to fiscal 2011. Cash flow is expected to remain flat compared to fiscal 2012. Tax rate is projected to be around 37% for the fiscal year.

The company currently retains a Zacks #4 Rank, which translates into a short-term ‘Sell’ rating. However, we presently maintain our ‘Neutral’ recommendation on the stock.

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