Lawson Tows Zacks Consensus - Analyst Blog
April 01 2011 - 1:52PM
Zacks
Lawson Software
Inc. (LWSN) posted net income of $21.4 million or 13 cents
per share in the third quarter of fiscal 2011, surging from a net
income of $1.7 million or 1 cent per share from the year-earlier
quarter.
Net income was positively
influenced by an improvement in operating income as well as a gain
from the settlement of a bankruptcy claim, sale of marketable
securities and lower income tax provision.
Excluding one-time charges but
including stock-based compensation expenses, EPS came in at 11
cents, in line with the Zacks Consensus Estimate.
Revenues
Revenues came in at $196.0 million,
up 5.0% year over year and exceeded
management’s guidance range of $188 million – $193 million and the
Zacks Consensus Estimate of $194 million. Excluding adjustments
related to purchase accounting, revenues came in at $197.9 million,
up 4.9% year over year.
On a segment basis, Software
revenues grew 9% year over year to $131.2 million, driven by a 6%
increase in license fees and 9% increase in Maintenance
services.
License revenues grew 20% in S3
industries (comprising customers in healthcare, public sector and
other services industries), which was partially offset by a decline
of 9% in the M3 segment (comprising customers in manufacturing and
distribution, equipment service management and rental, and consumer
products).
Revenues from Maintenance benefited
from higher renewal rates coupled with an increase in sales of
extended support agreements. Maintenance revenues increased both in
S3 and M3.
Consulting revenues remained static
year over year at $65 million. Lawson has been downsizing its
consulting organization over the past two years.
Margins
Gross margin came in at 59%, up 400 basis points year over year on
the back of increased software revenues and a decline in the costs
of license revenues. Operating margin came in at 11% compared with
6% in the year-earlier quarter, led by increased profitability in
both S3 and M3 segments.
Cash Flows and Balance
Sheet
During the quarter, cash from
operating activities increased to $73.3 million,
compared with $43.7 million in the year-earlier quarter, due
to improved profitability, maintenance renewals and collections of
receivables.
Lawson ended the quarter with cash
and equivalents (including restricted cash) of $311.3 million, up
from $288.9 million at the end of the previous quarter. Deferred
revenues (current portion) were up $22.3 million from the end of
the previous quarter to $220.2 million.
Management stated that the
company’s third quarter results include organic growth in its
strategic verticals and benefits from acquisitions. Furthermore,
Lawson focuses on achieving world-class operational execution and
delivering a superior customer experience.
The company preferred to cancel the
conference call and did not issue any guidance, due to the pending
decision regarding the recent unsolicited proposal from Infor and
Golden Gate Capital to acquire all the shares of Lawson at a price
of $11.25 per share in cash.
Lawson had hired Barclays Capital,
a division of Barclays PLC (BCS) to explore
strategic alternatives and plans to retain the latter as its
financial advisor to assist in evaluating the proposal, as well as
other possible strategic alternatives.
Lawson Software competes primarily
in two verticals – health care and retail – which are among the
fastest-growing segments of the enterprise resource planning (ERP)
market. Lawson operates in a highly competitive market dominated by
large players such as Oracle Corporation (ORCL)
and SAP AG (SAP) in health care, and
JDASoftware (JDAS), SAP and others in
retail.
BARCLAY PLC-ADR (BCS): Free Stock Analysis Report
JDA SOFTWARE GP (JDAS): Free Stock Analysis Report
LAWSON SOFTWARE (LWSN): Free Stock Analysis Report
ORACLE CORP (ORCL): Free Stock Analysis Report
SAP AG ADR (SAP): Free Stock Analysis Report
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