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Compuware Revenue, Profit Plunge

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Compuware headquarters in downtown Detroit

Compuware headquarters in downtown Detroit

DETROIT (WWJ) — Compuware Corp.’s revenue and profit both plunged in the second fiscal quarter ended Sept. 30.

Michigan’s biggest tech company, which provides software to run large corporate computer systems, said net income was $10.6 million, down from $22.7 million dollars a year ago. That worked out to 5 cents a share, below the Wall Street forecast of 6 cents a share.

However, Compuware said it met its internal expectations for the quarter.

“Compuware achieved its earnings per share expectations in Q2, supported by continued revenue growth and margin improvements from our APM and Covisint business units,” said Compuware CEO Bob Paul in a statement. “We have positive momentum heading into the second half of the year and will continue to focus on delivering profitable revenue expansion through our growth engines.”

New software license fees, an important barometer of future maintenance and subscription revenue, tumbled to $31.7 million, down from $61.7 million a year earlier.

Among other components of revenue, maintenance fees were $102.2 million, down from $109.1 mllion, subscription fees were $20.2 million, up from $19.1 million, professional services fees were $46 million, down from $53.2 million, and application services fees were $20.5 million, up from $17.5 million.

That left total revenue at $220.6 million, down from $260.7 million a year earlier.

Operating expenses were $203.4 million, down from $222.5 million a year earlier.

Bright spots included Compuware’s application performance management (APM) and Covisint secure communication businesses, which continue to grow strongly.

Later Tuesday, in a conference call with market analysts and reporters, Paul said that “wee are pleased we met our earnings guidance for Q2, however there are both positives and negatives for the quarter. At the macro level the growth drivers are doing well and position us for continued strength going forward. We did have some significant challenges in Europe. We were also challenged with a lackluster mainframe market, and as discussed earlier, this year represents a smaller number of mainframe renewal opportunities.”

Paul said Compuware’s APM sales saw “very disappointing results” in the Europe-Middle East-Africa region. “This was both execution related and delayed decisions in a tough market backdrop,” Paul said, adding that sales leadership changes have been made in the region.

Paul also said Compuware is releasing a first-of-its-kind APM product for mainframe computers, allowing computer managers to see how increasingly complex mobile and Web transactions are affecting mainframe performance.

Despite the lower numbers, Wall Street didn’t punish Compuware stock. It actually rose 3 cents a share, or 0.3 percent, to $9.52 a share in after-hours trading Tuesday evening, erasing a small 3 cent a share loss it suffered during the regular trading day Tuesday — a day when the overall market plunged more than 1 percent.

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