Shares of Irvine’s Epicor Software Corp., a maker of business software, rose after first-quarter results fell in line with analyst’s lowered expectations and the company gave a better-than-expected outlook for the back half of the year.
The stock closed up more than 5% before word of the results and was up about 2% in afterhours trading on a market value of about $460 million.
Epicor posted sales of $102 million, up slightly from $101 million a year earlier and just shy of analysts’ expected $103 million.
Including charges for stock compensation, acquisitions, research and development and other costs, Epicor swung to a loss of $7 million, versus a profit of $4.4 million a year earlier.
Profits included a tax benefit of about $4 million and expenses of roughly $15 million, including a loss on the settlement of option contracts that were meant to hedge against risks of falling currency values in Epicor’s buy of Britain’s NSB Retail Systems PLC last year, the company said.
Excluding the charges, Epicor would have made $4 million in profits, versus $9 million a year ago and a bit better than analysts’ expected $3.5 million.
Epicor’s losses are partially due to a delayed product launch and a drop in revenue from software licenses and consulting work.
License revenue totaled $19 million for the first quarter, down from $22 million a year ago, due to “the company not finalizing and communicating its retail product strategy to the market until the middle of March 2008, which resulted in significantly lower than expected retail sales during the 2008 first quarter,” Epicor said in a statement.
Although Epicor didn’t provide details, it appears to have gotten squeezed by one of its customers on consulting work and ended up doing more work for less money that it expected.
Revenues from consulting totaled $31 million, down from $33 million a year earlier.
“Consulting revenue and margin was significantly impacted in the first quarter, as a result of the company allocating significant consulting resources to a strategic project, with no additional associated revenue, in order to meet the company’s commitments,” Epicor said.
Chief Executive Thomas Kelly said he put in place a plan last month to “deliver significant improvement in our financial results.”
Kelly became chief executive in February, replacing longtime chief George Klaus, who’s now chairman.
Wall Street shrugged off the news of Epicor’s bad quarter. The company warned analysts and investors about the results a few weeks ago.
Epicor is expecting to get back to profitability during the current quarter. It’s looking for profits of $12 million to $13 million on sales of $130 to $134 million.
Analysts’ estimates are at the high end of its guidance,profits of about $13 million on sales of $134 million.
For the full year, the company is expecting profits of $54 million to $56 million on sales of $536 to $544 million.
Analyst are expecting profits of about $53 million on sales of $534 million.
