Software AG Systems Inc, the US middleware spin-off of German giant Software AG, warned that its first-quarter earnings will come in below analysts’ expectations. The Reston, Virginia-based company expects net income to be between $5.1m and $5.7m, or $0.16 – $0.18 per share, basically flat with the $5.4m, or $0.17, in the year-ago period. Analysts surveyed by First Call, meanwhile, were looking for $0.21 per share.
The company said the problems in the quarter were mainly a decline in product license revenue and a ‘softness’ in Y2K remediation work. Y2K uncertainty is said to have caused unusual delays in the closing of orders in the quarter as customers pushed back decisions on product upgrades. Customers were also taking a unexpectedly larger portion of Y2K remediation work in- house, the company said. It will announce final results for the first quarter on April 20.
The news is especially bitter for SAGA, as the company is known, after having posted more than 100% earnings growth in each of the last two years. Earnings for the whole year are still expected to show an improvement over last year, but the company wouldn’t project a number. Hope are high for the introduction of a new enterprise integration product, Sagavista, later this year.
