Outlook Scratches Blackboard

The education software outfit sinks after soft 2006 guidance.
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Blackboard (BBBB) matched fourth-quarter estimates but guided lower on the bottom line for 2006.

The Washington-based educational software publisher made $23 million, or 79 cents a share, up from the year-ago $5 million, or 17 cents. The latest quarter benefited from a $15 million reduction of the deferred tax valuation allowance. Excluding that gain, latest-quarter earnings were 28 cents a share, or 29 cents based on Blackboard's favored "cash net income" basis, which excludes the amortization of acquisition-related intangible assets.

Revenue rose 19% from a year ago to $35.7 million, with product revenue rising 18% to $32 million and services revenue rising 30% to $3.7 million. Analysts were looking for revenue of $35.6 million.

"Our business momentum continues to be strong with both revenue and earnings, which are once again exceeding expectations," said CEO Michael Chasen. "Our objectives in 2006 and beyond are to successfully integrate WebCT and to continue executing against our stated long-term targets as we did in 2005. We will achieve this by taking the best of both companies and continuing to lead the education industry in product innovation as well as superior client service and support."

For the first quarter, Blackboard guided to a 12-13-cent profit on revenue of $36.2 million. Cash net income should be 17-18 cents, the company said. Analysts were looking for a 16-cent profit on revenue of $36.5 million.

For 2006, the company expects cash earnings of 74 cents a share on revenue of $157 million. Analysts were looking for 84 cents on $159 million.

After sliding 87 cents in regular action Monday to $30.22, Blackboard dropped $1.06 after hours Monday to $29.16.