Slack European Demand Hits Mercury Interactive

But the company hits revenue and pro forma profit targets.
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Enterprise-software maker

Mercury Interactive


posted a mixed earnings report for the second quarter, with in-line revenue and a GAAP profit that was lower than analysts had expected.

On a GAAP basis, the Mountain View, Calif.,-based company posted a second-quarter net profit of $18.6 million, or 19 cents a diluted share, up from 11 cents a share in the year-ago period. Pro forma profit, which excludes stock- based compensation and acquisition-related amortization, rose to $36.7 million, or 37 cents a share, from $22 million, or 21 cents a share, a year ago.

Revenue grew 30% to $207 million. However, deferred revenue for the quarter decreased by $1.5 million from the first quarter of 2005 to a balance of $415.5 million.

Analysts were forecasting a GAAP profit of 27 cents a share and a pro forma profit of 33 cents a share with revenue estimated at $205 million.

"We did not meet all of our targets in Q2, primarily due to a shortfall in Europe," said Amnon Landan, chairman and CEO at Mercury in a statement. "We have already taken proactive action to capitalize on our market opportunities in Europe."

Earlier this month, Mercury warned it would miss its second-quarter target because of slack demand in Europe. Last Tuesday, Mercury's stock received a boost after Morgan Stanley upgraded the stock to overweight.

In aftermarket trading, Mercury was trading up 2.2% to $40 on Instinet.