CDC Software guidance for 2010, 2011 earnings misses analysts’ forecast; revenue to be higher

Tuesday, June 1, 2010

CDC Software earnings outlook misses forecast

ATLANTA — Business software maker CDC Software Corp. indicated Tuesday that earnings in 2010 and 2011 would be lower than what Wall Street was expecting, but revenue would be higher.

CDC Software said it expects to earn $1.15 to $1.25 per share in 2010, excluding certain items, on adjusted revenue of $220 million to $230 million. Analysts surveyed by Thomson Reuters were looking for earnings of $1.27 per share and $219 million in revenue.

For 2011, the software maker forecasts earnings of $1.35 to $1.45 per share, excluding items, on $245 million to $255 million in adjusted revenue. Analysts have been predicting earnings of $1.48 per share and $238 million in revenue.

CDC Software cited strong sales in its software-as-a-service business, which sells customers access to programs running on servers operated by CDC, rather than the traditional software licenses for programs that customers install and maintain on their own.

But the company has made several recent acquisitions as it expands the software-as-a-service part of its business, which it said will weigh on results in the near future.

“As a result, we believe that we will recognize less revenue up front compared to our traditional license model, and will also be realizing more expenses in R&D, sales and marketing and other integration-related costs,” Bruce Cameron, president of CDC Software, said in a statement.

The company said its 2010 guidance also reflects possible effects of two to three “significant” potential acquisitions.

Shares fell 26 cents, or 3 percent, to $8.28 in early afternoon trading.

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