Compuware Posts Loss, Revenue Falls, But Shares Rise

DETROIT — Compuware Corp. (Nasdaq: CPWR) Tuesday reported a loss of $63.7 million or 30 cents a share in the fourth fiscal quarter ended March 31. That compares to net income of $27.1 million or 12 cents a share in the same quarter of the prior fiscal year.

Revenue was $239.9 million, down 9.8 percent from a year earlier.

For the fiscal year, Compuware posted a loss of $17.3 million or 8 cents a share, vs. net income of $88.4 million or 40 cents a share in the prior fiscal year. Revenue for the year was $944.5 million, down 6.5 percent from the prior fiscal year.

However, Compuware stock rose 9 cents or 0.8 percent to $11.41 in after-hours trading. Why? Well, the Web site Wall St. Cheat Sheet said that while Compuware missed Wall Street’s earnings expectations, it beat Wall Street’s revenue prediction. That unexpected revenue number, the Web site said, is a positive sign to shareholders about future growth.

So-called ‘non-GAAP net income,’ which excludes restructuring charges, advisory fees related to the company’s response to a buyout offer, compensation of executives in stock, and the writedown of some intangible assets, was $57.3 million or 26 cents a share for the year, down from $88.4 million or 40 cents a share in the prior year.

“While our fourth quarter results were a disappointment, as a large number of deals we had anticipated closing were pushed into the new fiscal year, we made great strides executing on our strategic initiatives to transform the company while positioning Compuware for improved profitability in 2014 and 2015,” said Compuware CEO Bob Paul. “Additionally, we are making good on the shareholder value creative actions announced in January, as we have declared our first quarterly dividend, filed the S-1 registration statement with the SEC for the Covisint IPO and raised our cost-reduction expectations to $80-$100 million in the next two years.”

In a conference call with analysts and journalists, Paul said Compuware now believes that 60 percent of the deals that did not close in the fourth quarter, about $8.5 million, will close in the first quarter of 2014. The remaining deals, about $6 million worth, will close by the end of the year, Paul said.

“This reflects the strong demand we are seeing in the market for our APM and Mainframe for APM solutions,” Paul said. “Going into 2014, we remain focused on rebalancing our portfolio with continued emphasis on our high-growth businesses, executing our cost reduction plan and driving better sales execution to position Compuware for value creation and sustained growth into the future.”

Compuware announced in April that its fourth quarter would be a disappointment.

In the call, Paul provided a look back at the past four years of Compuware’s management, in which it has shifted its growth away from its legacy mainframe software and overhauled its sales strategies and cost structure.

For fiscal 2014, Compuware said it expects total revenue of about $1 billion, earnings of 35 to 37 cents a share, cash flow from operations of $150 million to $160 million, and cost cuts of $45 million.

To listen in to the replay of a conference call discussing these results, call (800) 475-6701 in the United States and (320) 365-3844 elsewhere, using the pass code 287033.

Among components of revenue, new software license fees — an important indicator of future revenue — was $48.4 million in the quarter, down from $67.9 million, and $178.9 million for the year, down from $220.9 million. Maintenance fees were $100 million for the quarter, down from $104.6 million, and $407.5 million for the year, down from $427.5 million. Professional services fees were $44.9 million for the quarter, down from $51.8 million, and $185 million for the year, down from $209.2 million.

Compuware had 4,491 employees as of March 31, down from 4,564 a year earlier.

Compuware reported $332.7 million in revenue for its mainframe software for the year, $304.8 million in application performance management revenue, and $86.1 million in revenue for its Covisint secure communication and collaboration business unit.


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