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Charges, Sales Slam Hyperion

Shares of the software maker fall more than 11% after hours on a revenue miss and charges.
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Shares of

Hyperion Solutions


are off more than 11% as slower-than-expected software sales and the cost of employee stock options weighed heavily on the software company's third-quarter results.

Hyperion, which sells business-intelligence applications used to sift through corporate data, earned a profit of $16 million, or 26 cents a share, down from $18.8 million, or 30 cents a share, a year ago.

Total revenue for the quarter increased by 5% to $185.6 million, compared with $177.1 million in the March quarter of fiscal 2005.

Excluding the cost of expensing stock options, which did not affect the year-ago results, the Santa Clara, Calif., company posted a profit of $22.8 million, or 37 cents a share.

On the same basis, the company earned a profit of $19.5 million, or 31 cents a share, last year.

Wall Street was expecting a 35-cent-a-share profit on sales of $187 million in the just-completed quarter.

Although the company exceeded EPS expectations and only narrowly missed the top-line target, sales of software licenses were disappointing, dropping by 6% to $64.4 million.

Wall Street was expecting double-digit growth, and when the company failed to deliver, investors began to sell heavily.

In recent trading on Instinet, shares were off $3.88, or 11.5%, to $29.75.

CEO Godfrey Sullivan promised better results in 2007. "We're disappointed with the weakness in license revenue, which occurred primarily as a result of challenging business conditions in EMEA and unfavorable currency fluctuations, but continue to expect double-digit license revenue growth in fiscal 2007," he said in a press release.

Hyperion released an updated version of its business-intelligence software late in the year and said it would take a few quarters for sales of the new product to increase.

Looking to the current, or fourth, quarter, the company expects to post a non-GAAP profit ranging from 41 cents to 45 cents; analysts polled by Thomson First Call were estimating that the company would earn a profit of 42 cents.

Total revenue will likely range from $199 million to $204 million, compared with expectations of $202 million.