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Compuware Misses Estimates

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Compuware Corporation (NasdaqGS:CPWR - News) posted a net income of $21.6 million or 10 cents per share in the third quarter of fiscal 2012 compared to a net income of $22.7 million or 10 cents in the second quarter of fiscal 2012 and a net income of $34.0 million or 15 cents per share in the year-ago quarter.

The results failed to meet management’s guidance range of 11 cents -13 cents and the Zacks Consensus Estimate of 11 cents per share.

Michigan-based Compuware Corporation provides software products and professional services to many of the largest users of information systems across the world.

Revenues came in at $253.1 million, up 2.5% year over year but down 2.9% sequentially. Software license fees came in at $57.1 million, down 5.1% year over year. Maintenance and subscription fees were $126.7 million in the third quarter, increasing 2.1% year over year.

Revenue from professional services in the third quarter was $50.6 million, up 4.8% year over year.

Application services revenues increased 29.2% year over year to $18.6 million.

Operating cash flow came in at $41.9 million. Operating expenses totaled $220.5 million, rising from $197.5 million in the previous quarter. Operating margin declined to 12.9% from 20.0% in the year-ago quarter and dropped from 14.6% in the previous quarter.

Effective tax rate of the third quarter came in at 34.2%.

Exiting the third quarter of fiscal 2012, cash and cash equivalents amounted to $82.2 million rising marginally from $81.9 million in the previous year period.


For fiscal 2012, management projects EPS of 40 cents – 42 cents primarily attributable to strong revenue yields, operational expenditure cuts and sales execution strategies. Cash flow is expected to come at $165 million - $175 million.

Major cost reduction and production efficiency strategies implemented by management are expected to keep operating expenses between $880 million and $890 million by the end of fiscal 2012.

Due to favorable effects from tax settlements on a number of audit issues, effective tax rate for the next quarter is forecast to be within 34% which would hopefully keep the tax rate for fiscal year 2012 at around 33.4%.

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