Updated from 4:45 p.m. EST

BMC Software ( BMC) delivered a mixed bag of news for investors Tuesday, beating top-line expectations for the third quarter, while narrowly missing on the top, and raising guidance. But in the end, it appeared that investors focused on a sharp decline in bookings, despite management's protestations that the falloff was mostly due to accounting changes.

In recent postclose trading on Instinet, shares were off 57 cents, or 2.7%, to $20.46.

BMC, which sells software to manage mainframes and other large systems, earned $47 million, or 22 cents a share, vs. $36 million, or 16 cents a share, in the year-ago quarter.

Excluding various items, the business software vendor earned $64 million, or 30 cents a share, compared with $50 million, or 22 cents a share, a year ago. Profitability was helped by a cut of $36 million, or 10%, to operating expenses, which dropped to $310 million and operating income (before items) grew by $29 million, or 71%, to $71 million.

Total revenue, however, was off 2%, dropping to $380 million from $387 million a year ago.

Analysts polled by Thomson First Call were looking for a 27-cent-a-share profit on sales of $388 million.

Total bookings dropped year over year by 11% to $170.4 million. Last year's quarter, noted analyst Bert Hochfeld, who runs a research firm under his own name, was also weak, coming in at roughly $190 million, well under the previous year's mark of $236.3 million.

Mainframe management and scheduling bookings, still the heart of BMC's business, were off more -- down 21% year over year. However, BMC's management attributed the drop to a larger-than-expected shift from traditional license revenue to subscription revenue. "Taking that into account, our mainframe business was even, or flat," CEO Bob Beauchamp said on a call with analysts.

That claim was greeted with some skepticism on the call; Hochfeld for one, said during an interview that he simply didn't agree. "It's hard for me to understand how negative 29% is really flat." He added that it would be legitimate to attribute the total revenue miss to the accounting shift, however. All in all, he said, "the quarter was a disappointment."

Although expenses will increase seasonally in the current quarter, Beauchamp said there is still room to increase efficiencies. Much of the savings in the third quarter were the result of cuts in headcount and other items during a reorganization. Non-GAAP operating margin in the third quarter increased from 11% in the prior year to 19%.

Also up was service management bookings revenue, an area that management has pointed to as a focus of efforts to recast the company. That number was up 13% year over year to $60.2 million.

The Houston-based company now expects to post a fourth-quarter profit of 26 cents to 31 cents a share on sales ranging from $390 million to $410 million. Earlier guidance called for a profit of 25 cents to 30 cents a share on revenue of $375 million to $395 million.

Wall Street was forecasting EPS of 28 cents and revenue of $405 million.