Mentor Graphics Shares Shoot Higher

SAN FRANCISCO -- Mentor Graphics(MENT Quote - Cramer on MENT - Stock Picks) scaled back its fiscal 2009 expectations, but Wall Street saw the move as a good sign.

The company forecast "modestly higher" revenue for fiscal 2009 than the $860 million for the year just ended and earnings growth of 5% to 10%, implying EPS, less items, of $1.05 to $1.10. Analysts were looking for 2009 EPS of $1.10.

"The company sees a softer electronics market creating a more challenging ... environment at least through the first half of the year," the company said in a statement. Mentor "continues to believe that it is better positioned than its competition, and expects to grow faster than the industry on a revenue basis for fiscal 2009."

Shares of Mentor Graphics were recently up $1.50, or 19.4%, to $19.24, spurred in part by a ratings upgrade by Citigroup, which suggested that the company's more conservative guidance would spark a reduction in earnings estimates, which at higher levels were an overhang to the stock.

In November, Mentor had said it would post fiscal 2009 revenue of $920 million.

The Wilsonville, Ore., maker of software for the design of microprocessors also said full-year 2008 revenue will be $860 million, implying revenue of $277.5 million for the fourth quarter ended in January.

Analysts had been expecting $272.4 million, according to Thomson Financial. One year ago, the company adjusted its fiscal calendar, starting the first quarter in February.

Equivalent quarterly comparisons cannot be made for the fourth quarter of 2006, when the year ended in December.

EPS for the quarter, suggested by the company's full-year expectations of 30 cents, will be 38 cents.

Excluding items, EPS is expected to be 74 cents for the fourth quarter. Analysts were expecting 71 cents.

Mentor Graphics is due to issue its earnings report Feb. 28.