GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Compuware Corp. Reports Operating Results (10-Q)

August 06, 2009 | About:
10qk

Compuware Corp. (CPWR) filed Quarterly Report for the period ended 2009-06-30.

Compuware Corporation provides business value through software and professional services that optimize productivity and reduce costs across the application life cycle. Meeting the rapidly changing needs of businesses of all sizes Compuware\'s solutions improve the quality ease the integration and enhance the performance of distributed e-business and enterprise software. (Company Press Release) Compuware Corp. has a market cap of $1.77 billion; its shares were traded at around $7.31 with a P/E ratio of 10.9 and P/S ratio of 1.6. Compuware Corp. had an annual average earning growth of 59.5% over the past 5 years.

Highlight of Business Operations:

Software license fees (license fees) decreased $20.9 million or 34.0%, which included a negative impact from foreign currency fluctuations of $4.0 million, during the first quarter of 2010 to $40.5 million from $61.4 million during the first quarter of 2009.

Maintenance fees decreased $15.4 million or 12.2%, which included a negative impact from foreign currency fluctuations of $8.1 million, during the first quarter of 2010 to $111.1 million from $126.5 million during the first quarter of 2009.

Cost of software license fees includes amortization of capitalized software, the cost of duplicating and disseminating products to customers, including associated hardware costs, and the cost of author royalties. Cost of software license fees decreased $2.2 million or 35.2% during the first quarter of 2010 to $3.9 million from $6.1 million in the first quarter of 2009. The decrease was primarily due to a reduction in capitalized software amortization as $17.6 million of capitalized software was sold to Micro Focus as part of the Quality and DevPartner divestiture. This capitalized software was classified as held for sale at March 31, 2009, as a result, no amortization was recorded in the first quarter of 2010 (see Note 2 of the Condensed Consolidated Financial Statements included in this report).

Cost of maintenance fees consists of the direct costs allocated to maintenance and product support such as helpdesk and technical support. Customers who subscribe to maintenance are also eligible to receive the benefit of new releases as well as technical support. Cost of maintenance fees decreased $3.0 million or 25.3% during the first quarter of 2010 to $9.0 million from $12.0 million in the first quarter of 2009. The decreases were primarily due to lower compensation and benefit costs resulting from employee headcount reductions as part of the restructuring actions taken during 2009 (see Note 8 of the Condensed Consolidated Financial Statements included in this report) and to a lesser extent the transfer of employees to Micro Focus as discussed above. As a percentage of maintenance fees, cost of maintenance fees were 8.1% and 9.5% in the first quarter of 2010 and 2009, respectively.

Before the capitalization of internally developed software products, total technology development and support costs decreased $700,000 or 2.7% during the first quarter of 2010 to $24.4 million from $25.1 million in the first quarter of 2009. The decrease in expenses was primarily due to lower compensation and benefit costs resulting from employee headcount reductions as part of the restructuring actions taken during 2009 (see Note 8 of the Condensed Consolidated Financial Statements included in this report) and to a lesser extent the transfer of employees to Micro Focus as discussed above.

Sales and marketing costs consist primarily of personnel related costs associated with product sales, sales support and marketing for our product offerings. Sales and marketing costs decreased $8.2 million or 13.3% during the first quarter of 2010 to $53.1 million from $61.3 million in the first quarter of 2009. The decrease in sales and marketing costs was primarily a result of the following: (1) a decrease in bonus and commission costs of $4.6 million due to the decline in software license sales in 2010 and (2) a decrease in compensation and benefit costs of $3.3 million resulting from employee headcount reductions as part of the restructuring actions taken during 2009 (see Note 8 of the Condensed Consolidated Financial Statements included in this report) and to a lesser extent the transfer of personnel to Micro Focus as discussed above.

Read the The complete ReportCPWR is in the portfolios of Dodge & Cox.

Rating: 1.5/5 (2 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK