Zacks_Analysts' Blog : CPWR's Preliminary 3Q Results - Analyst Blog

Compuware Corporation (CPWR) has recently provided a peek at its December 2011 quarter financial results.

Segmental growth seemed quite a mixed bag for the December quarter.

APM revenues went through a convalescing period, thereby increasing 16% year over year and 15% quarterly. SAAS revenues, Covisint revenues and Changepoint revenues were quite encouraging, growing by 9%, 29% and 32% year over year, respectively. License fees also recorded a growth of 16% year over year.

On the other hand, Mainframe Solutions and Uniface revenues declined 10% and 3% year over year, respectively.

The overall picture was quite disappointing as total revenues showed an increase of only 2% year over year and earnings came in at 10 cents per share falling short of the Zacks Consensus Estimate of 12 cents per share.  The EPS also failed to meet the previously projected outlook of $0.11 to $0.13 per share declared during the second quarter results earlier this year.

Management shed light on its fiscal 2012 guidance, thereby lowering its EPS estimates from $0.47 - $0.50 per share to $0.40 - $0.42 per share. Revenues are now expected to show an overall growth of 8% to 10%. The APM and Covisint segments are the main flag bearers in the eyes of the company to yield favourable results in future.

It would be intriguing to see how Compuware battles the ominous pressures of its rivals with its currently grim scenario. These rivals consist of big players such as BMC Software Inc. (BMC), CA Technologies (CA) and International Business Machines Corp. (IBM) who as of now seem to be at a more formidable position in the application software industry.

The Zacks Consensus Estimates for fiscal years 2012 and 2013 stand at 48 cents per share and 60 cents per share, respectively.

We currently have a long-term recommendation of Neutral for the company’s stock. In the short run, we have a Zacks #4 Rank for the stock, which translates into a short-term rating of Sell.