DETROIT (WWJ) — Stock in Detroit’s Compuware Corp. (Nasdaq: CPWR) tumbled 10 percent in early trading Tuesday after the company announced its earnings for the quarter ended Dec. 31 would miss Wall Street expectations.

Compuware stock opened the day at $8.28 a share but plunged as low as $7.45 in trading Tuesday morning. Compuware closed for the day near that bottom, at $7.49, down 9.5 percent on the day. It fell further in after hours trading.

The company announced before the market opened that sales of new mainframe software, the company’s core business since the 1970s, would dip in the quarter from year-earlier levels.

And the company said its quarterly earnings were expected to be 10 cents a share, vs. Wall Street’s expectation of 12 cents. Annual earnings for the fiscal year that will end March 31 were reduced to 40 to 42 cents a share from the earlier estimate of 47 to 50 cents.

In a statement, Compuware emphasized the positive about the quarter, but investors weren’t convinced.

“Compuware achieved a number of important goals” in the third quarter, CEO Bob Paul said, including 16 percent growth in its application performance management (APM) products and services revenue, and 29 percent growth in revenue at its Covisint secure business connectivity unit.

Compuware has a fast growing business in software that measures the speed and effectiveness of Web and mobile applications, and its Covisint business, which provides a secure data pipeline for users, has also grown rapidly in recent years.

“Despite these accomplishments, we did not reach our high expectations for APM growth rates and mainframe solutions total revenue” in the quarter, Paul said.

Looking ahead, Paul said Compuware expects “APM revenue to accelerate and our Covisint business to continue its positive momentum.”

However, Paul said that due to APM’s slower-than-expected start and the flattening of mainframe software business, it was cutting its fiscal year earnings projection to 40 to 42 cents a share on revenue growth of 8 to 10 percent.

“Most importantly, we expect every Compuware business unit to deliver yearly revenue growth, setting the foundation for positive momentum in the fiscal year ahead and positioning us to achieve Compuware’s three-year revenue and profitability goals,” Paul said.

In a conference call with analysts, Paul blamed “pure sales execution” issues for the miss, “several millions of dollars of business we had expected and had commits for. Obviously we’re disappointed.” He said a penny of the earnings miss could also be blamed on currency fluctuations.

“The story for this quarter and the next quarter is our APM business is showing healthy growth but not as much as we anticipated,” Paul said, adding that APM sales management was replaced in October and improved results are already showing.

Paul said Compuware would provide more detail on a planned initial public stock offering for the Covisint subsidiary in its regularly scheduled quarterly earnings call Jan. 26.

As for mainframe software sales, Paul said Compuware would “aggressively work to decrease expenses and increase productivity going forward.”

The company’s fiscal year forecast of $160 million to $165 million in cash flow was left unchanged.

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