Shares of Costa Mesa-based FileNet Corp. plunged 11% in afternoon trading Tuesday, despite positing a better profit for the December quarter a day earlier.
David Hilal, an analyst at investment bank Friedman Billings Ramsey, downgraded shares of FileNet, which makes software that manages files, records and databases at banks, governments and companies.
Hilal lowered his rating on FileNet to “market perform” from “outperform,” saying that while the software maker’s results were better-than-expected, its guidance suggested “continued hurdles toward driving growth.”
In the most recent quarter, FileNet’s software sales were flat while its revenue from services rose 12%. The company said it expects to benefit from stricter compliance rules facing public companies in the wake of Sarbanes-Oxley accounting reform.
Operating profit rose 44% to $10.1 million in the quarter ended Dec. 31, on sales of $107.5 million.
The Friedman Billings Ramsey analyst also lowered his sales estimate for the current quarter to $97 million. He sees earnings coming in at $4.5 million.
That’s down from an earlier sales forecast of $100.8 million and earnings of $6.6 million.
