Compuware Shares Dumped After Missing Q2 Estimates (CPWR)

After reporting a weak fiscal 2013 second-quarter result that missed estimates and a lowered guidance, application software developer Compuware’s (NASDAQ: CPWR) share price opened on a jittery note and fell 9% to $8.64 per share in the first hour of trading.

The Michigan-based software provider operates in six segments, namely Application Performance Management (APM), Mainframe, Changepoint, Uniface, Professional Services and Covisint Application Services. Compuware reported its fiscal 2013 second-quarter results yesterday after the market closed.

Total revenues were $220.6 million in the second quarter of fiscal 2013 compared to $260.7 million in the prior-year corresponding period. The average revenue estimate of analysts was $236.3 million for the second quarter of 2013.

Net income for the reported quarter declined to $10.6 million, or $0.05 per share, from $22.7 million, or $0.10 per share, in the second quarter of 2012. The average estimate was $0.06 per share for the second quarter of 2013. At the end of the second quarter, the cash and cash equivalents of the company stood at $63.5 million.

The share price of Compuware remained in the range of $8.00 to $9.00 for most of the fiscal year 2013. The share price broke the upper end of the range in mid-August to reach a new 52-week high of $10.25 per share. Compuware’s share price, however, corrected back to $9.33 in the second week of October 2012.

Following the dismal results that missed street expectations today, the share price of Compuware nose-dived to $8.73 within minutes after the opening of the trading session. More than 1.5 million shares were dumped in the first 45 minutes. With no respite in selling, the stock declined by 15% to touch a low of $8.02 by noon.

For fiscal 2013, Compuware now anticipates total revenues between $980 million and $995 million and earnings in the range of $0.36 to $0.40 per share. The previous revenue and earnings guidance was in the range of $1.04 billion to $1.05 billion and $0.43 to $0.47 per share, respectively. For the full year, the average consensus estimate was decreased from $0.45 per share to $0.43 per share over the last 90 days. Cash flow from operations is expected to be in the range of $150 million to $160 million for the fiscal 2013.

Commenting on the results, Compuware CEO Bob Paul stated, “We have positive momentum heading into the second half of the year and will continue to focus on delivering profitable revenue expansion through our growth engines.”

Compuware ended the day at $8.37 per share, down $1.12 or 11.8% on a volume of 27.91 million shares.

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Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.