SAN FRANCISCO -- Now that Lawson Software (LWSN) has liquidated troublesome securities, its next fiscal year should come up strong as margins improve.

For most of fiscal 2008, profit at the business software developer was whacked by impairment charges totaling $18 million, as the value of its auction-rate securities plummeted with the evaporation of the credit markets.

A one-time charge of $6.1 million halved the company's fourth-quarter profit reported late Thursday; shares were down 26 cents, or 3.6%, to $6.91 in recent trading Friday.

Lawson succeeded in liquidating the holdings after the end of the fourth quarter and is on course for both revenue growth and margin improvements.

"We were a model company for being proactive in pursuing a liquid exit path" from those securities, CFO Rob Schriesheim said in an interview.

"We are in a much, much stronger situation," CEO Harry Debes said on Thursday's conference call. After the recent launch of many new products, "our portfolio is richer than ever before."

"We have a better value proposition than

SAP

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,

Oracle

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, or

Microsoft

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," Debes said. Despite competition and turbulent economic times, the company has improved margins and ramped up growth. "We are continuing to grow our software bookings, our licensed revenue and the signed backlog of future license revenue," he said.

"The biggest indicator of the underlying health

of a software-and-services company is the deferred revenue balance," Schriesheim said. "We've got this revenue already in the bank."

Total deferred revenue grew 19% year over year to $312.6 million.

Lawson's industry-specific software has grown to represent a larger share of the overall business, now accounting for 64% of revenue, up from 40% the prior year, Debes said. The company is selling "larger deals to larger organizations as we move up the food chain."

For 2009, the company

projected revenue ranging

between $920 million and $925 million and EPS, less items, of 43 cents to 47 cents. The consensus estimate of analysts was for revenue of $922.3 million and EPS of 51 cents.

Earnings guidance fell short of the consensus estimate because most analysts haven't revised their estimates since interest rates declined, Schriesheim said. Consensus estimates incorrectly assume about 4 cents of interest income, he added. After subtracting that assumption, "our guidance is right in line with consensus estimates."

For 2009, the company expects further improvement toward its operating margin goal of 15%, excluding special items. In 2008, Lawson's operating margin improved to 10%, from 7% in 2007, Schriesheim said. During the fourth quarter, operating margin reached 11.5%, driven by revenue growth. Although the timing for achievement of the 15% goal wasn't set, operating margin will be substantially higher than in 2008, he added. For the near term, the company will continue investing in offshore centers for up to nine months.

In the consulting business, which now accounts for 45% of revenue, gross margins improved to 18.4% during Q4, from 11% in the year-ago period, after the transfer of some support services to a center in the Philippines, Debes said. That center will continue to improve company margins as training begins to pay off, he added.

Schriesheim said Lawson expects cash flow from operations to exceed $100 million in 2009. Cash flow from operations in 2008 was $81.6 million, down 17% from the prior year, when cash flow was $98.5 million.

For the fourth quarter, revenue at the St. Paul, Minn. software developer grew 9.4% to $233 million, from $212.9 million for the same quarter of last year. Analysts were expecting a top line of $229 million, according to Thomson Reuters.

As a result of the one-time impairment charge, net income fell 55% to $3.7 million, or 2 cents a share, from $8.1 million, or 4 cents a share, in the year-ago period.

Excluding special items, EPS was 10 cents, in line with analysts' estimates.