Updated from Feb. 5

Business Objects

(BOBJ)

grew fourth-quarter revenue by 46% year over year, but lost 12 cents a share, largely because of costs associated with the acquisition of

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Crystal Decisions

.

On the surface, the business-intelligence software maker's first-quarter earnings guidance fell well below Wall Street estimates. But it wasn't clear if analysts had correctly accounted for the effect of the acquisition. Business Objects' shares were down 77 cents, or 2.3%, to $31.89 early Friday.

Revenue in the firm's December quarter was a record $184.2 million, compared to $126.2 million a year ago. But net income dropped to a loss of $8.6 million from a profit of $12.8 million, or 20 cents a share, in 2002. The quarter's results include 20 days of revenue and expenses contributed by Crystal Decisions, as well as acquisition costs totaling $43.5 million.

Excluding Crystal Decisions, Business Objects posted a 25% jump in revenue year over year, to $158 million. That was higher than the consensus of analysts polled by Thomson First Call, who were expecting $153.8 million, and the company's own forecast of $144 million to $147 million.

Analysts had projected a pro forma profit of 27 cents a share, but Business Objects did not provide net income figures excluding Crystal Decisions, acquired Dec. 11.

Excluding Crystal Decisions, Business Objects license revenue climbed 16% from a year ago to $76 million. Operating income jumped 94% from a year to $33 million, representing an operating margin of 21%.

Business Objects generated $93.5 million in cash from operating activities in the fourth quarter, up from $67.2 million a year ago.

For the March quarter, Business Objects projected revenue would range from $208 million to $218 million, exceeding the Wall Street consensus of $192.2 million. Pro forma earnings are expected to range from 10 cents to 16 cents a share, well short of the consensus estimate of 20 cents a share.

But there was some confusion about the treatment of $12.6 million, or 8 cents a share, in deferred maintenance revenue from Crystal Decisions in the first quarter. Under purchase accounting rules, Business Objects is not allowed to recognize that revenue from Crystal Objects, although analysts may have included it in their guidance.

Adding the 8 cents back into Business Objects' earnings guidance would bring it up to 18 cents to 24 cents a share -- straddling the consensus estimate.

Rob Tholemeier, an analyst with DRW Research in New York, said the confusion underscores the difficulty of judging a company based on earnings.

"What you got to focus on from my point of view is: Are they growing, are they taking share, do they have operating margins ... are they generating cash? The answers to all of those questions are yes," said Tholemeier, who holds Business Objects shares. "I think relative to the rest of software, this is one of the few companies that is still growing nicely."