Compuware Wary of Mega-Dearth

The software company sees EPS of 6 cents to 8 cents; analysts' estimates are for 13 cents.
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A substantial revenue shortfall will make



the latest software company to tell investors that it won't hit its financial targets for the March quarter.

In an announcement after the closing bell Tuesday, Compuware said it expects to post a fourth-quarter profit ranging from 6 cents to 8 cents per share on revenue of about $316 million. License revenue will be about $85 million. Analysts polled by Thomson First Call were expecting a 13-cent profit on sales of $351.93 million.

A year ago, the company earned 9 cents a share on revenue of $337.7 million; license revenue was $101.3 million.

Commenting on the results, CEO Peter Karmanos said, "It's important to keep in mind that Compuware's net increase of $18 million in deferred revenue for the quarter means that -- in effect -- Compuware closed software license agreements worth more than $100 million in the fourth quarter."

He noted that the company derived $140 million in cash flow from operations and now has cash and short-term investments worth $860 million.

Karmanos' explanation didn't mollify investors. In recent after-hours trading, shares were off 57 cents, or 8.4%, to $6.24 a share after closing at $6.81.

The Detroit-based company said maintenance revenue for the quarter should hit $108 million, while revenue from professional services is expected to be about $123 million.

Compuware said it received the initial $20 million from the settlement of its intellectual property case against


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. The payment won't affect operating results and will be recorded as deferred revenue but not included in the $18 million increase in deferred license fees, the company said.