C++ and Java programming tools house Rogue Wave Software Inc shares lost nearly half their value overnight Wednesday on news that its $21m paper acquisition of Stingray Software Inc, plus delayed orders, a sales reorganization and the cost of relocating its headquarters from Corvallis, Oregon to Boulder, Colorado will certainly result in a big loss. The shares closed at $15.50 on Wednesday before the announcement and opened down $7 at $8.50 on Thursday morning, only reaching $9 and change by the end of the day. Although Rogue Wave said revenue for its second quarter would be in the region of $10.2m, up 32% on $6.9m last time, earnings will be just $0.04 – $0.33m on the 8.4 million shares outstanding – before charges for the acquisition and other costs. The street had been looking for $0.13. Net income in the same period last year was $0.6m, $0.07 per share. Although Rogue Wave president Mike Scally said there’s no likelihood the company might be stung by departures from the Stingray Java and MFC Microsoft Foundation Class development team as gossip from its competitors suggested (CI No 3,379), it’s nevertheless been whacked by a combination of negative financial forces. Scally said that because the way the Stingray acquisition is being accounted for – as a pooling of interest – there’s no way it can force any employees to stick around under SEC rules. Its long term plan is to enable developers to write applications that can run on Unix servers and Microsoft clients using C++ and Sun and Microsoft Java technologies interchangeably. It already supports Sun’s ‘Swing’ Java interface components and Microsoft MFC frameworks but says it’s impossible to delineate what a seamless end-to-end visual application development environment will look like until Sun and Microsoft disclose their strategic plans for Java over and above the posturing. Rogue Wave will publish its results on April 21st after the US market closes.
