Compuware announced preliminary fourth quarter results on Apr 3, 2013. For the quarter ended Mar 31, Compuware expects to report non-GAAP earnings per share (“EPS”) in the range of 5 cents to 6 cents. Currently, the Zacks Consensus Estimate is pegged at 16 cents.
Compuware expects total revenue to be in the range of $237.0 million to $241.0 million for the quarter. The Zacks Consensus Estimate of revenues currently stands at $281.0 million. Compuware noted that approximately 75% to 80% of committed deals for the fourth quarter were pushed to fiscal 2014, primarily due to uncertain IT budgets and slow recovery in the European IT spending environment.
Application Performance Management revenues are expected to be in the range of $76.0 million to $78.0 million, while Mainframe revenues are projected in the range of $79.0 million to $81.0 million.
Compuware forecasts license fees to be in the range of $46.0 million to $48.0 million. Maintenance revenues are expected to be between $99.0 million and $101.0 million. Services revenues are expected to be in the range of $45.0 million to $46.0 million. Covisint revenues are expected to be in the range of $25.0 million to $26.0 million. Subscription revenues are expected to be approximately $21 million for the fourth quarter.
Earlier, in Jan 2013, Compuware reported impressive third quarter 2013 earnings of 12 cents per share that surpassed the Zacks Consensus Estimate by 9% (11 cents). Quarterly results were primarily aided by modest revenue growth and margin expansion.
Compuware also rejected a $3.2 billion bid from activist investor Elliott Management Corp. Compuware cited the $11.00 per share offer as inadequate and announced a number of initiatives that included a dividend payment for the first time in its history.
Compuware will pay a dividend of 50 cents per share beginning first quarter of fiscal 2014. The company announced a 3-year restructuring plan that will save $60.0 million annually. For fiscal 2014, the plan is expected to save a minimum of $20 million. Additionally, Compuware announced plans to distribute its remaining shares in Covisint Corp directly to shareholders after completing the IPO of the 20% Class A stock.
Over the last couple of months, several new private equity funds, such as Apax Partners LLP and Hellman & Friedman LLC, have emerged as prospective buyers for Compuware. Although a better buyout offer will be positive for investors, we believe that the prevailing sluggish macroeconomic conditions will likely act as an impediment toward fetching a higher price.
We believe that Compuware’s recently announced initiatives are positive for shareholders over the long term. Moreover, new program wins, innovative product pipeline and partnership with International Business Machines (IBM - Analyst Report) will help Compuware to counter strong competition from the likes of BMC Software Inc. and CA Technologies (CA - Analyst Report) going forward.
Currently, Compuware has a Zacks Rank #3 (Hold).