Updated from April 2
Business intelligence stocks were soaring Thursday on the strength of a robust earnings report by
and an upgrade to rival
In recent trading, Cognos, which yesterday announced fourth-quarter revenue growth of 15%, had gained $1.78, or 7.5% to $25.50. Business Objects, raised to outperform from neutral by CS First Boston, was up $1.45, or 8.4%, to $18.66. Volume on both stocks was more than twice the norm.
Also surfing the BI wave is Hyperion Solutions,
, up $1.34, or 5.2%, to $27.34, on average volume.
Writing about Business Objects this morning, CFSB analyst Bernd Volkel said the company "is one of the few hot spots in tech -- we forecast 11% revenue growth at the top of the sector." Interestingly, he downplayed threats to BOBJ's core business by
, saying that the giant software company is at least a year away from having competitive BI products in the market, and noted that just 15% of BOBJ's installations run on top of Microsoft databases. (CFSB has an investment banking relationship with Cognos.)
Business intelligence software is used to sift through corporate databases for information and reports needed to support operational decisions. The software needs to work well with the underlying database, provided by
, Microsoft, or other providers.
Revenue for Cognos in the fourth quarter ending Feb. 28 was $163.7 million, compared with $142.8 million a year ago. Net income was $29.6 million, or 33 cents a share, as calculated according to generally accepted accounting principles. Three cents of those earnings were credited to a lower tax rate in the quarter, the company said. Net income a year ago was $10.1 million, or 11 cents per share.
Both quarterly revenue and earnings per share exceeded Wall Street's expectations. The Street was expecting revenue of $161 million for the quarter, and EPS of 27 cents.
For the full fiscal year 2003, the company reported annual revenue of $551 million, an increase of 12% over fiscal 2002, but below consensus estimates of $584.54 million, according to Thomson Financial/First Call. Net income for the year was $73.1 million, or 81 cents a share, 6 cents better than expected by Wall Street, and 6 to 7 cents better than the company had projected.
Looking forward, Cognos expects revenue in the May quarter to range from $146 million to $150 million -- stronger than Wall Street's expectations of $144.49 million. Cognos expects to earn between 12 and 14 cents in the quarter, trending under Street expectations of 14 cents a share.
The company was less specific about the full year, but CFO Tom Manley said to expect growth in the company's core business of about 10%, and indicated that the current EPS consensus of 91 cents a share is accurate. Revenue, he said, should be about in line with Wall Street's expectations of $667 million.
Significantly, the company's $157 million acquisition of Adaytum, which makes software used for planning and budgeting, contributed about $6 million of revenue in the fourth quarter, about $1 million more than expected. Going forward, the company expects Adaytum revenue to grow about 15% this year, Manley said.