Software Firms Likely Will Forget the Third Quarter, Look to Fourth
On Monday, when the magnitude of this week's terrorist attacks translates into the cold, insensitive math of stock prices, some software shares may feel more pain than others.
Long a hard-to-stomach aspect of software investing, software firms take in the lion's share of their revenue at the end of the quarter. As the third quarter draws to a close Sept. 30, that means they could be particularly vulnerable as businesses from all sectors try to regroup in the wake of Tuesday's attacks.
"This is going to hit software companies especially hard," says Jon Ekoniak, an analyst who covers the software sector for U.S. Bancorp Piper Jaffray. "Most
In getting back to business as usual, American companies face hurdles ranging from the mundane to the complex, and they will all take time to work out, observers said. For instance, employees from all walks of life were still scattered across the country Thursday as a ban on air travel was partially lifted. They'll need to get home and assess the situations at their own firms before closing any deals that were in the works."Fifty to 60 percent of software license sales close in the third month of the quarter, and we all know that nothing got done this week," says Bill Schaff, manager of the $30 million Berger Information Technology fund, which owns software names including Siebel Systems (SEBL), Oracle (ORCL) and Microsoft (MSFT). "They'll be lucky if anything gets done next week. I guarantee you right now in New York, no one is thinking about software application development." Schaff says the slowing of business, already apparent in myriad cancellations of corporate events in September by companies such as Microsoft, SAP (SAP) and webMethods (WEBM), could have a dramatic impact on the top and bottom lines of software companies during the third quarter, a fact investors will fret over when trading resumes Monday. "I think there could be some huge misses," Schaff says. "Now mind you, they'll use
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