Highlights from Autodesk's Quarterly Conference Call

Ralph Grabowski, editor
reprinted by permission

August 15, 2002

"Customers are holding back," says Autodesk, and so its revenue outlook for this fiscal year has fallen to US$860-$900 million. This is a big drop from:

• $1.025-$1.045 billion anticipated at the beginning of this fiscal year.
• US$947 million revenue for last year.
• US$936 million for the year before.

AutoCAD sales fell to $103 million, down from $111 million in the previous quarter, and from $119 million a year earlier. The MCAD division did well because its sales were flat at $33 million compared with the previous quarter, and up 21% from a year earlier. An analyst wanted separate numbers for Inventor's upgrade and new sales, but Autodesk would not provide them. Only Asia-Pacific showed an increase in sales. Details here:<http://media.corporate-ir.net/media_files/NSD/ADSK/reports/SRFACTSHEET.pdf>.

Other highlights from the Q2 FY03 conference call Autodesk held with financial analysts last week:

The next major release of AutoCAD will be in Q1 next year (Feb-Apr).

Expect Revit v5 before the end of October this year, which will feature improved DWG-read. An analyst asked, when will Revit supersede

Architectural Desktop? Autodesk responded with two answers: "Customers will dictate it," and "The future is Revit."

Subscription contracts account for nearly 60% of US$74 million in deferred revenue; that translates (very roughly) into 30,000 subscribers. Autodesk promises to announce actual numbers at the end of this year. The subscription program for Asia-Pacific has been delayed until 2003 pending implementation of new software for tracking subs. An analyst asked: is subscription income impacting negatively on quarterly revenue? Autodesk expects that upgrade revenue will eventually disappear as "everyone" is on subscriptions (scary thought).

A soft real estate market is making it difficult for Autodesk to sell or sub-lease office space it no longer needs. After hiring a net of 9 employees in Q2, Autodesk will lay off 7% of its workforce of 3,715 - most in Q3. Autodesk still has $407 million in cash.

AG Edwards reduced ADSK stock from a Strong Buy to a Hold.

MorningStar's analysis: "Although we expected the company to reduce expectations, the revised numbers are lower than we anticipated.

The stock will probably trade down on this news, but we remain convinced it is undervalued on the basis of projected cash flows. While tough IT spending conditions will continue to take a toll, we expect business to improve in the coming months on the heels of new versions of two flagship products, Inventor and AutoCAD."  <http://biz.yahoo.com/ms/020816/79616_2.html>.

-- Published by upFront.eZine Publishing, Ltd.

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