EARNINGS PREVIEW: Global Growth To Boost US Software Companies
July 11 2011 - 11:20AM
Dow Jones News
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.
COMPANIES TO WATCH:
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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