CEO John Chen said earnings were $20 million short of what Sybase had expected.
Sybase Inc. on Thursday reported revenues of $181.6 million for the first quarter of 2003, ended March 31, a 14 percent decline in year-ago revenues of $211 million.
Pro forma diluted earnings per share also slipped, falling to 17 cents per share, compared with 21 cents per share in the first quarter of 2002. First-quarter earnings per share based on GAAP (Generally Accepted Accounting Principles) was 13 cents, compared with a loss of $1.14 reported in the first quarter of 2002.
Sybase Chairman, President and CEO John Chen said in a teleconference with the media and analysts on Thursday morning that earnings were $20 million short of what the Dublin, Calif., company had expected.
He blamed two-thirds of the shortfall on licensing shortfalls and the rest on losses in consulting services and education. Sybases closure rate on deals was half of what it normally is, Chen saida shortfall that Senior Vice President and Chief Financial Officer Pieter Van der Vorst called "frankly, very surprising."
Showing particularly disappointing results were the financial services and telecommunications sectorstypically two of Sybases strongest markets. "[Nearly] all big deals in telecommunications got pushed out in North America," Chen said.
Chen pointed to customers views of political and economic instability as being the cause of the revenue shortfall. "It eliminates near-term incentive for making purchases," Chen said. He said that the deals are delayed, not canceled, and that all will be closed in future quarters.
Van der Vorst attributed Sybases decline in professional services and education revenue to a trend thats not unique to Sybase: namely, that enterprises are shelving discretionary spending. Also, education revenues are being affected by customers disinclination to travel. Between terrorism, war and fears over contracting SARS (Severe Acute Respiratory Syndrome), Sybase officials dont expect to rebound in the near future, he said.
On the plus side, the companys completion of its acquisition of AvantGo last quarter means that Sybase now owns and operates the worlds largest mobile portal, with over 8 million subscribers, Chen said. "Notwithstanding the difficult global economy, we were able to maintain a stable operating margin," he said in a statement. "Were bullish on our future."
Pro forma net income for the quarter was $16.1 million, versus $21.2 million for the year-ago quarter. On a GAAP basis, first-quarter net income was $13 million, compared with a loss of $116.4 million in the first quarter of 2002.
Sybase reported $464.5 million in cash and cash investments, including restricted cash of $9 millionan increase of $71.6 million from Dec. 31, 2002. The company repurchased $15 million of its stock during the first quarter, with $35.4 million of its current share repurchase authorization remaining.
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