Updated from Aug. 21
moved more than 9% higher Friday, a day after the software company reported tax-benefit-aided earnings that beat estimates.
In recent trading, Autodesk shares were up $1.52, or 9.2%, to $17.73.
This was despite a downgrade from Ryan Beck and Co. analyst Brian Foote, who took Autodesk down to market perform from outperform. In his report, Foote said the company's shares were fairly valued at $18 and above. Ryan Beck has not done recent banking with the company.
Autodesk on Thursday beat second-quarter earnings estimates by a penny, although net income excluding charges shrunk 11% from a year ago. Autodesk reiterated earnings guidance for the full year, but warned that revenue could fall lower than a previous forecast.
Investors appeared to be paying closer attention to the strong earnings results, however, and boosted shares accordingly. Shares soared to $18.35 in after-hours trading Thursday after closing up a nickel, or 0.3%, at $16.21.
The San Rafael, Calif.-based maker of design and special-effects software reported GAAP income of $32.6 million, or 29 cents a share, in the second quarter, compared with net income of $11.8 million, or 10 cents a share, in the same period a year earlier. Net income in the second quarter 2004 included a one-time tax benefit of $19.7 million involving an industrywide issue regarding foreign sales corporations that was resolved favorably.
Excluding charges, Autodesk said it earned pro forma net income of $12.9 million, or 11 cents a share, in the second quarter, down from pro forma net income of $14.5 million, or 13 cents a share, a year earlier. The company said revenue was virtually flat at $211.7 million, vs. $211.4 million a year earlier and up slightly from $210.8 million in the first quarter.
Wall Street analysts expected Autodesk to earn 10 cents a share on $211.2 million in revenue in the second quarter, which ended in July, according to Thomson First Call.
In its last earnings report, the company offered lower-than-expected second-quarter guidance because the SARS outbreak had prompted the company to stop rollout events and client meetings in China. Autodesk forecast second-quarter revenue ranging from $207 million to $212 million and net income ranging from 7 cents to 10 cents a share.
In a postclose conference call, CEO Carol Bartz said that impact was as predicted in China, the fastest-growing market for the company. But she suggested that was offset by an "incredibly good quarter" in Japan and "good quarter" in Australia. Bartz said strength in China will offset seasonal weakness in Europe in the third quarter.
Looking forward, Autodesk expects third-quarter revenue to range from $216 million and $221 million and third-quarter earnings to range from 13 cents to 16 cents a share. That estimates straddled the consensus estimate targeting third-quarter revenue at $219.1 million and earnings at 15 cents a share.
"It's positive," U.S. Bancorp Piper Jaffray analyst Gene Munster said of the company's third-quarter guidance. "I think people were generally looking for more of a flattish quarter for the October quarter." Munster, who has an outperform rating on Autodesk, had modeled revenue at $210 million. Munster said the tightening of guidance for the full year, meanwhile, was expected. Munster has an outperform rating on Autodesk and his firm has done banking with the company.
For the full year, Autodesk lowered the high-point of the range for revenue guidance, saying revenue will fall between $875 million and $885 million. In May, the company said revenue would range from $875 million to $900 million. Autodesk reaffirmed past guidance for earnings ranging from 50 cents to 60 cents a share.
In a note earlier this month, Munster noted there are no near-term catalysts for Autodesk and predicted Street numbers will be lowered for fiscal year 2004. Resellers, however, are expecting an uptick in the company's fourth quarter, which ends in January because that's when Autodesk will stop offering technical support for AutoCAD 2000. Customers who buy the newest version. called AutoCAD 2004, after the so-called AutoCAD "obit," set for Jan. 15, will be required to pay for a full seat instead of a less expensive upgrade.
Bartz called AutoCAD 2004 the fastest growing product launch in the company's history, with the percentage of users on the latest version vs. prior versions never at its highest point ever for the company at this point in a launch cycle. The company booked $29 million in the quarter from AutoCAD upgrades, driving a 65% sequential increase in revenue for upgrade revenue for its Design Solutions Group.
"We are seeing strong acceptance of our new products, and as a result upgrade revenues increased substantially during the quarter," Bartz said. "AutoCAD revenues got off to a terrific start in August," she added. She confirmed that the fourth quarter will see a jump from AutoCAD upgrades before the January deadline.