Profit Drops at Synopsys

The maker of software for semiconductors beats estimates, but income falls from a year ago.
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(SNPS) - Get Report

beat the Street's forecast on the top and bottom line for the company's third quarter, but mixed EPS guidance for the current quarter and a hefty profit drop sent shares lower after hours.

The stock dipped 40 cents, or 2.2%, to $18.20 in recent after-hours trade.

The Mountain View, Calif.-based company, which markets software for semiconductor design, earned $7.6 million, or 5 cents a share, falling from $17.3 million, or 12 cents a share, in the year-ago quarter.

The 2006 third-quarter results included $15.6 million in stock-based compensation expenses, which were not included in the year-ago comparison. In addition, last year's figure included a one-time gain from a legal settlement related to the company's acquisition of



Excluding certain items, Synopsys earned $30.1 million, or 21 cents a share, roughly doubling its profit of $15.3 million, or 11 cents a share, for the third quarter of 2005.

Revenue grew 10% to $277.2 million from $251.5 million in the same period last year.

Analysts polled by Thomson First Call expected the company to earn 19 cents a share on sales of $274.9 million.

"Our third quarter was excellent, as we again executed well on all fronts," CEO Aart de Geus said in a statement. "Our momentum is visible through strong financial results, customer adoptions of our technology and the introduction of innovative new products."

For the fourth quarter, Synopsys forecasts revenue in the range of $274 million to $282 million, in line with consensus estimates of $279.2 million.

The company said GAAP EPS should be between 1 cent and 5 cents a share. Non-GAAP EPS will range from 17 cents to 19 cents a share. On that basis, the company falls short of analysts' forecast of an EPS of 20 cents.

For the full year, Synopsys said sales would be about $1.09 billion, matching analysts' projections. On the bottom line, the company said it will earn between 11 cents and 15 cents a share for the year.

Excluding certain items, its profit will be between 73 cents and 75 cents, at or better than the analyst estimate of 73 cents.

The company closed the regular session at $18.60 after gaining 36 cents, or 2%, during the trading day.