BMC Earnings Up for Q2

Software company beats estimates, although revenues were down from a year ago.

BMC Software Inc. Thursday became the latest software company to turn in improved financial results for its second fiscal 2003 quarter, earning four cents a share and posting net income of $10.1 million, compared with a 22 cent loss and net loss of $53.3 million for the same quarter a year earlier.

Excluding special charges, BMC posted better-than-expected earnings per share of eight cents, besting its July estimates of two to six cents a share. Outside the special charges, the Houston-based enterprise management software supplier posted net income of $19.3 million.

Still, revenues were down slightly over the year earlier period at $291.2 million, compared with $295.1 million one year earlier. The biggest losses came with total licenses revenues of $120.4 million--down $11 million one year earlier. Maintenance revenues made up the difference at $150.9 million, an increase of $9.7 million. Professional services revenue was $19.9 million, compared with $22.4 million one year earlier.

Across product lines, data management and systems management for the mainframe market posted double-digit license revenue growth, while BMCs distributed systems management tool--Patrol--was down. Beauchamp attributed the Patrol weakness to the "overall IT environment and the weak Unix market," he said.

"The spending environment in IT markets remains challenging. Asia Pacific continues to perform well and exceeded its targets," Bob Beauchamp, BMCs president and CEO said in the earnings call Thursday. Beachamp added that Latin America also produced good results, but some large deals expected to be signed in the Americas did not take place, including one Patrol deal valued at several million dollars.

Separately, BMC announced Thursday that it has signed a strategic pact with IBM Global Services that calls for IGS to resell certain BMC tools, and it has expanded its relationship with Sybase Inc. to develop new management and monitoring tools for the Sybase enterprise data management platform. Sybase will also offer BMCs enterprise management offerings.

During the quarter, BMC announced a strategic alliance with Dell Computer Corp., which will use BMC tools internally and resell some of its management tools. BMC also announced during the quarter its intention to acquire the Remedy division from bankrupt Peregrine Systems for $350 million. That deal is expected to be closed next month.

On the product side, BMC announced an agentless version of Patrol, dubbed Patrol Express. The company also introduced a new host configuration tool, dubbed Deployment Manager for Linux for zSeries.

Beauchamp said BMC expects to generate earnings of eight to 11 cents a share for its third fiscal 2003 quarter and earnings for the full year at between 36 to 42 cents a share on revenues that rare expected to be 4 percent to 5 percent lower than fiscal 2002.