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Ahead Of The Bell: Analysts Cheer Autodesk Cuts

The Associated Press

NEW YORK (AP) — Analysts applauded cost cutting efforts at Autodesk Inc. on Friday, after the software maker's adjusted first-quarter earnings far outpaced expectations despite a sharp drop in revenue.

Autodesk, late Thursday, reported adjusted earnings of 18 cents per share, compared with the average forecast from analysts of 8 cents.

"We expect shares to react favorably to proactive cost controls and revenue stabilization despite uncertainty around an economic rebound," Deutsche Bank analyst Greg Dunham told clients in a note. KeyBanc analyst Steven Koenig raised his rating on the stock to "Hold" from "Underweight."

The San Rafael, Calif. company, which makes engineering software, added to previous rounds of layoffs on Thursday, saying it will cut 430 jobs, or about 6 percent of its work force.

In April, Autodesk said it would slash operating expenses by $100 million to $150 million through a mix of layoffs, cuts in discretionary spending and consolidation of facilities.

On Thursday, the company reported a 7 percent drop in operating expenses for the fiscal quarter ended April 30.

But Dunham told clients, "We do not see the resizing of the business ... dramatically reducing growth potential," saying "the downturn has highlighted inefficiencies" in the company's operations.

He reiterated a "Buy" rating on shares.

Ross MacMillan, an analyst with Jefferies & Co., said Autodesk "proved it can cut expenses with conviction."

But he put a greater focus on the company's sales, which slid 29 percent to $425.8 million year-over-year. He kept his "Hold" rating on the stock, "given the lack of certainty of revenue recovery."