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SPSS Catches a Bid

The company's earnings report drives shares higher.
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Shares of business-software maker



were up 10% on news that the Chicago-based company increased its fourth-quarter profit by 65%, as better margins and cost controls made up for modest revenue growth.

SPSS earned $5.9 million, or 30 cents a share, compared with $3.6 million, or 20 cents per share, for the same period in 2004. Sales increased 3% to $62.2 million from $60.5 million in the year-ago period, SPSS said after Tuesday's closing bell.

Analysts polled by Thomson Financial were looking for earnings of 27 cents a share on sales of $62.9 million.

Cost controls -- operating expenses dropped about 5.5% -- and additional efficiencies in the sales organization pushed operating margins to 14% from 6% a year ago, Mark Nelson, the company's controller, said during an interview. Prices, he added, were stable.

Software license revenue grew 7.6% to $25.45 million; maintenance revenue edged up by 1.2% to $25.4 million, while service revenue slipped to $6.98 million from $7.63 million.

Although guidance was on the light side of analysts expectations, investors liked the report, and in recent trading on Wednesday shares were up $2.92, or 10%, to $32.16. SPSS sells predictive analytics software and competes most directly with privately held SAS.

SPSS projected that first-quarter earnings will range from 14 cents to 20 cents a share, including 3 cents a share in stock-based compensation. Sales will likely range from $58 million to $60 million.

Analysts expect first-quarter earnings of 23 cents a share, before stock option expenses, on sales of $60.6 million.