J.D. Edwards Sinks After Warning

Updated from May 5

Shares of J.D. Edwards ( JDEC) were dropping in heavy trading after its warning that second-quarter results will fall below Wall Street's expectations.

In recent trading, the stock was off $1.62, or 12%, to $11.38, compared to Monday's $13 close. A series of enterprise software makers warned in early April, and short interest in J.D. Edwards rose 15% during the month, according to nasdaqtrader.com. Tuesday, with the Nasdaq Composite up more than 1.5%, JDEC was rising from Monday's after-hours price of $10.68.

By midday, more than 4 million shares had changed hands, compared to a typical day's volume of about 828,000 shares.

After the close on Monday, the company said it believes total revenue in the April quarter will range from $200 million to $205 million, within 5% of the company's earlier guidance, but well below the $214 million consensus of analysts polled by Thomson First Call.

Pro forma earnings, the company said, will be breakeven to 1 cent a share; Wall Street was expecting pro forma earnings of 6 cents. The company will lose 1 cent or 2 cents per share for the quarter, according to generally accepted accounting principles.

CEO Bob Dutkowsky blamed the miss on several major deals that were expected to close in the quarter, but didn't. However, he said "none of the large transactions that did not close in our second quarter were lost to our competitors." It isn't clear when those transactions will close, he said.

Another contributing factor: License revenue, which has a high margin, is likely to range from $42 million to $45 million in the quarter, compared to the company's earlier guidance of $54 million.

Final results will be released on May 29.

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