BMC Beats Street, Lowers 2002 Expectations

Despite a sales increase for its fourth quarter ended March 31, BMC Software Inc. reported that net earnings for fiscal year 2001 fell sharply compared to fiscal 2000.

Total revenues for the enterprise systems-management software maker for fiscal 2001 were $1.5 billion, down 13% from the $1.7 billion posted in 2000. Earnings per share were 79 cents for the year, compared with $1.76 for fiscal 2000. BMC is expecting 2002 earnings to be higher at 90 cents to 93 cents a share, but that's below analyst expectations of $1.13.

For the fourth quarter, revenues were $422.8 million, up 10% compared with third quarter 2001 and down 11% compared with the same period last year.

BMC president and CEO Bob Beauchamp says the company will see 2002 revenue increase 12% to 15%, or $1.68 billion to $1.73 billion based on 2001. Beauchamp says the company expects first quarter 2002 earnings to be 11 cents to 14 cents per share on $355 million to $365 million revenue. Analysts had anticipated 20 cents per share.

Previously this month, BMC said it would lay off roughly 6% of its more than 7,300 employees; Beauchamp said those cuts were nearly finished.

Analysts say BMC is doing all the things that need to be done and its lowered financial expectations for 2002 are reasonable. "Beauchamp is paying close attention to the forecasts of his sales team and setting expectations appropriately," says Steven Foote, president of the research firm Ensers.com.

Foote says despite the overall IT slowdown, companies will continue to invest in software that boosts infrastructure. "Although companies wanting to be more conservative with their expenditures doesn't bode well for hardware makers, it doesn't hurt performance management vendors as much," he says. "Money that would have been shoveled into some new E-business venture will now be spent to do a better job with the systems they have."