Mercury Interactive Corporation (Nasdaq: MERQ), a provider of enterprise testing and performance management solutions, reported results for the second quarter that were broadly in line with expectations. The numbers were released after the close in New York.
Revenue for the second quarter of 2001 was $96.0 million, an increase of 38 percent over the $69.6 million reported in the second quarter of 2000 but $2 million lower than Wall Street estimates. Pro forma net income was $16.2 million, an increase of 30 percent compared with net income of $12.4 million in the second quarter of 2000. Pro forma earnings per share increased to $0.18, up 29 percent from $0.14 for the second quarter of 2000. Pro forma EPS was in line with analysts’ expectations.
For the second quarter, net income was $9.3 million or $0.10 diluted earnings per share. This included amortization of goodwill and other intangible assets of $5.3 million, amortization of unearned stock-based compensation of $0.6 million and restructuring and integration charges of $0.9 million associated with the Freshwater Software acquisition.
Mercury Interactive chairman, CEO and president Amnon Landan said, “I am very pleased with our second quarter results, especially in a very tough worldwide economic environment.”
In a conference call, Mercury warned that it would not meet estimates for the third quarter. The company now estimates profits will remain flat, and predicts an EPS of $0.17 - $0.18 per share in the third quarter, compared with previous estimates of $0.22 per share.
The company also warned that sales for the year would total $390 - $405 million, compared with estimates of $429 million.
Mercury said that it had already cut its workforce by 8% during the second quarter and had implemented a 15% pay cut for senior management and trimmed other costs.
Reacting to the lowered expectations, Merrill Lynch said that given the still strong fundamentals at Mercury, the 43% sell-off of the company’s shares since the beginning of July left Mercury in an oversold position. Merrill Lynch reiterated its “Buy, Long Term Buy” ratings for the stock.
Mercury shares, which fell 11.38% to close at $34.19, lost as much as another 10% to $31 in trading after the close.
Published by Israel's Business Arena on 19 July, 2001