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Rational Software Bolts Higher on Earnings, Outlook

The company says there's a good chance earnings and revenue will beat estimates for fiscal 2003.

Rational Software


posted better-than-expected results for the fiscal second quarter, and the company offered optimistic guidance for the rest of the fiscal year, sending its stock sharply higher after the close of regular trading.

According to generally accepted accounting principles, the company reported a second-quarter loss of $19.4 million, or 10 cents a share, compared with a loss of $21.6 million, or 11 cents a share, in the same period a year ago.

Excluding a series of charges and items, Rational reported earnings of $7.1 million, or 4 cents a share. On that basis, the company earned $9.5 million, or 5 cents a share, a year ago.

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Revenue for the quarter fell to $154.5 million from $163.7 million, a decline of 6%. Analysts polled by First Call were expecting revenue of $147.8 million, and earnings, before items, of 3 cents.

For the third quarter ending Dec. 31, Rational forecasts revenue of $155 million to $165 million and earnings excluding items of 4 cents to 7 cents a share. For the fiscal year ending March 31, 2003, the company projects a top line of $625 million to $650 million and earnings before items of 20 cents to 25 cents a share.

Analysts are looking for third-quarter earnings of 5 cents and revenue of $155.8 million. For the year, Wall Street expects a profit of 20 cents and revenue of $621.8 million.

Rational sat out a

broad software sector rally Thursday and ended regular trading down 56 cents, or 9%, at $5.60. But in after-hours Instinet action, the stock climbed 95 cents, or 17%, to $6.55.