Updated from May 19

Synopsys

(SNPS) - Get Report

reported stronger-than-expected second-quarter results after the close Wednesday. The company raised earnings guidance for the rest of the year, even as it said revenue could come in slightly lower than previously estimated, partially reflecting its decision to walk away from its

Monolithic System

(MOSY) - Get Report

acquisition.

Investors responded to the post-close earnings report by pushing shares higher, recently by $2.23, or 8.8%, to $27.55.

"Synopsys continues to execute well in an improving spending environment," wrote D.A. Davidson & Son senior analyst Bill Frerichs, who has a buy rating on the stock. "Synopsys alone offers investors an attractive opportunity to go with the leader in the broad upturn now underway." (His firm has done investment banking with Synopsys.)

Needham analyst Rich Valera was slightly less upbeat, calling the quarter solid "though not perfect." He noted the company has been "seemingly reeling" from a weak first-quarter bookings performance, the break-up of the unpopular Monolithic deal and the departure of a couple of executives. But "we think the company's

fiscal second-quarter earnings report, while not perfect, should help alleviate some of the deepest concerns surrounding Synopsys recently," wrote Valera, who maintained his buy rating. (His firm hasn't done banking with Synopsys.)

Under generally accepted accounting principles, Mountain View, Calif.-based Synopsys reported net income of $28.7 million, or 18 cents a share, in the second quarter. That compared to net income of $22.3 million, or 15 cents a share, in the same period a year earlier.

Excluding charges, the semiconductor design software maker said it earned pro forma net income of $57.1 million, or 35 cents a share, in the second quarter, compared to pro forma net income of $61.2 million, or 40 cents a share, a year earlier.

Revenue rose 1% to $294.6 million from $292 million a year earlier.

Wall Street analysts expected Synopsys to earn pro forma net income of 33 cents a share on $293.1 million in revenue in the second quarter, according to Thomson First Call. The company's results also came in at the high end of its guidance, which called for second-quarter revenue ranging from $285 million to $300 million and pro forma earnings ranging from 31 cents to 35 cents a share.

Synopsys expects third-quarter revenue to range from $300 million to $320 million and pro forma EPS to range from 35 cents to 40 cents. Analysts were expecting third-quarter revenue of $310.2 million and earnings of 34 cents a share.

Synopsys revised its guidance for the full year, saying it expects revenue to range from $1.20 billion to $1.23 billion and pro forma EPS to range from $1.37 to $1.47. In February, Synopsys projected that revenue for the full year should range from $1.2 billion to $1.25 billion, with earnings ranging from $1.30 to $1.40 a share. The consensus estimate sat at $1.38 in earnings on $1.21 billion in revenue for the full year.

Part of the reason for the change in guidance was the company's decision to back out of its deal to acquire Monolithic System, announced on the previous earnings call. According to analysts, it appears the deal was called off because of a patent infringement and trade-secret suit filed against Monolithic, although the company also has said Monolithic failed to meet other requirements. Monolithic has since sued Synopsys and a trial is scheduled in July.

Synopsys reported a book-to-bill ratio slightly above 1.0, with about three-quarters of software orders booked as subscriptions recognized over the life of the contract and the remainder as perpetual licenses recognized upfront.