MSC.Software Warns

Updated from Oct. 12

MSC.Software (MSCS Quote - Cramer on MSCS - Stock Picks) plunged 18% Friday after the company warned of a possible third quarter loss and a steep revenue shortfall.

The Santa Ana, Calif., business simulation software company expects to report revenue in the range of $58 million to $60 million for the third quarter ended Sept. 30. That's down from $75.6 million a year ago and far shy of the $84 million Thomson Financial target.

Adjusting for certain items, MSC said software license revenue fell 15% from a year ago, while maintenance revenue was flat and services revenue plunged 28%. "Revenue in this range may result in a small GAAP net loss for the quarter," the company said.

"We believe that the third quarter financial results reflect the challenges associated with the transition to selling enterprise simulation solutions," said CEO Bill Weyand. "These challenges result in delayed purchase decisions on the part of our major customers, a longer approval processes within their organizations and the lengthening of sales cycles. In addition, recognition of certain enterprise simulation software revenue in the quarter was deferred to future periods."

MSC said it will "continue to evaluate our cost structure going forward."

Shares fell $2.70 to $13.