EARNINGS PREVIEW: Global Growth To Boost US Software Companies

Date : 07/11/2011 @ 11:20AM
Source : Dow Jones News
Stock : Citrix Systems, Inc. (MM) (CTXS)
Quote : 83.49  0.75 (0.91%) @ 8:00PM

EARNINGS PREVIEW: Global Growth To Boost US Software Companies

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TAKING THE PULSE: Major U.S. software companies are expected to report higher sales and profits as the industry benefits from an increase in technology spending across a number of geographies. Last month, research company Gartner Inc. (IT) said worldwide enterprise software revenue was on pace to hit $268 billion this year, a 9.5% increase from the prior year. The researcher said economic recovery was evident across all regions, although concerns have arisen in some countries in Europe and Asia.

Recent results from business-software giant Oracle Corp. (ORCL) and smaller players Tibco Software Inc. (TIBX) and Progress Software Corp. (PRGS) were mixed, although Oracle reported a strong double-digit percentage jump in software sales and Tibco's results exceeded expectations. However, Progress Software's results were weak and the company lowered its full-year outlook, while Oracle's hardware sales disappointed investors.

   International Business Machines Corp. (IBM) - reports July 18 

Wall Street Expectations: Analysts surveyed by Thomson Reuters Corp. (TRI) expected a profit of $3.03 a share on revenue of $25.35 billion, up from earnings of $2.61 a share and revenue of $23.72 billion.

Key Issues: IBM, which last month celebrated its centennial, has reported strong results in growth markets, including China and Russia, and has also pushed to expand its reach in new markets across the globe. The company has invested heavily in a number of areas, such as business analytics and cloud computing, and also recently introduced new software and services to rapidly analyze massive amounts of data from sources such as the Internet.

   VMware Inc. (VMW) - reports July 19 

Wall Street Expectations: The world's biggest computer-virtualization software company is projected to report a profit of 47 cents a share on revenue of $873 million. A year earlier, VMware posted a profit of 18 cents--or 34 cents excluding stock-based compensation and other items--on revenue of $673.9 million.

Key Issues: VMware, majority owned by EMC Corp. (EMC), is projected to report a sixth consecutive quarter of profit growth as sales continue to benefit from strong demand for virtualization software. The company has made a handful of acquisitions in recent months including last month's agreement to buy software firm Digital Fuel, a deal aimed at building its suite of software-as-a-service offerings to complement its core business.

   Microsoft Corp. (MSFT) - reports July 21 

Wall Street Expectations: The industry giant is expected to report a fiscal fourth-quarter profit of 58 cents a share on revenue of $17.27 billion, up from income of 51 cents and revenue of $16.04 billion a year earlier.

Key Issues: Microsoft late last month launched an online version of its Office software, pitching the package's appeal for small and medium-sized businesses. The company has also recently offered previews of an upgraded version of its Windows Phone software and a new touch-based user interface for its next-generation Windows operating system, known for now as Windows 8. In May, it agreed to pay $8.5 billion to buy Internet phone company Skype Technologies SA, as Microsoft moves aggressively to ramp up its growth.

   Citrix Systems Inc. (CTXS) - reporting date to be announced 

Wall Street Expectations: The company, which improves efficiency by allowing multiple systems to operate on one computer, is predicted to report a profit of 55 cents a share on revenue of $523 million. A year ago, Citrix posted earnings of 25 cents--or 41 cents excluding stock-based compensation and other items--on revenue of $458.4 million.

Key Issues: Citrix's desktop-solutions business--which includes XenApp and XenDesktop--has seen its growth rate accelerate the last few quarters due to the increasing importance of desktop virtualization. Citrix has used sales promotions to keep active customers or upgrade inactive clients, and the company has also had success selling multi-product deals. Still, investment firm J.P. Morgan last month downgraded its stock rating on Citrix, as it expressed concern about "overly optimistic market adoption rates of desktop virtualization technology," and, specifically, of XenDesktop.

(The Thomson Reuters financial estimates and year-earlier figures may not be comparable due to one-time items and other adjustments.)

-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com

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