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FreeMarkets' Guidance Short of Estimates

The software company met earnings estimates but guidance comes up short of Wall Street's expectations.

Updated from 4:32 p.m. EDT



reported third-quarter earnings Monday that beat estimates by three pennies on in-line revenue, but said fourth-quarter and full-year results could come in short of expectations.

The Pittsburgh-based company, which makes sourcing and supply-chain software, posted a net loss of $4.6 million, or 11 cents a share, in the third quarter, under generally accepted accounting principles. That compares with a net loss of $3 million, or 7 cents a share, in the same period a year earlier.

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Excluding charges, FreeMarkets said it earned pro forma operating income of $3.1 million, or 7 cents a share, in the third quarter, compared to pro forma net income of $1.9 million, or 4 cents a share, a year earlier. That beat the company's target and Wall Street consensus from Thomson First Call by three pennies.

FreeMarkets said revenue and fees fell 10.2% to $38.8 million from $43.2 million a year earlier and fell 3.7% from $37.4 million in the previous quarter. That was in line with the $38.8 million in revenue and fees that analysts were expecting and the company's guidance of $38 million to $39 million in the third quarter, which ended in September.

FreeMarkets expects fourth-quarter revenue to range between $37 million and $39 million, fourth-quarter earnings to range from 4 cents to 5 cents a share, and a GAAP loss to range from 18 to 19 cents a share. Analysts were expecting earnings of 8 cents a share on $41.4 million in revenue in the fourth quarter.

For the full year, the company forecast revenue would range from $151 million to $153 million, operating earnings excluding charges to range from 2 cents to 3 cents a share, and a GAAP loss to range from 71 to 72 cents a share.

Analyst forecasts targeted full-year revenue at $155 million, with pro forma earnings at 3 cents a share.

Shares of FreeMarkets sank to $7.45 in after-hours trading after closing down 36 cents, or 4.2%, at $8.20, in the regular session.