RightNow Technologies shares drop on lower-than-expected 1st-quarter, 2010 earnings outlooks
By APThursday, February 4, 2010
RightNow shares dip on weak 1Q, 2010 outlooks
PHILADELPHIA — Shares of RightNow Technologies Inc. fell Thursday after the customer-service management software company forecast first-quarter and 2010 earnings below analyst expectations.
Wedbush analyst J. Derrick Wood said a higher tax rate affected RightNow’s forecasts, with more aggressive hiring plans also taking a toll on the first quarter because it will lead to higher expenses.
He expressed his concerns about a change in the company’s sales structure as well, noting that RightNow plans to add 40 ‘client success’ managers who will work with representatives in the field to drum up more business from existing accounts. But these changes will add an element of risk to sales in coming quarters.
Wood kept his “Neutral” rating but raised his price target to $17 from $15.50.
RightNow said late Wednesday that in the first quarter of 2010, it expects to record earnings of 6 cents per share to 8 cents per share, excluding one-time items. Analysts projected profit of 9 cents per share, according to a Thomson Reuters survey.
For the year, RightNow expects to post profit of 39 cents per share to 45 cents per share, excluding one-time items. Analysts forecast income of 47 cents per share.
RightNow’s first-quarter and full-year revenue, however, were above analyst expectations. The company forecast revenue of $42 million to $42.5 million in the first quarter and $175 million to $180 million for 2010.
Analysts predict revenue of $40.3 million for the first quarter and $170.4 million for the year.
While stepped-up hiring and salary increases will increase costs in 2010, the growth of expenses should moderate as the year progresses, with an improvement in margins seen in 2011, said Jefferies analyst Ross MacMillan.
He kept his “Hold” rating on RightNow and lowered his earnings estimates for the year to 43 cents per share from 45 cents per share. However, MacMillan raised his 2011 profit forecast to 63 cents per share from 54 cents per share.
Shares of RightNow, based in Bozeman, Mont., fell $2.18, or 13.2 percent, to $14.34 in afternoon trading. The stock has ranged from $6.14 to $18.22 over the past year.
