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MSC.Software Posts a Mind-Numbing, Excuse-Filled Third Quarter

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Randall S. Newton, November 19, 2007

Last year we called MSC.Software’s third quarter 'one to forget.' By most measures, the third quarter of 2007 was even worse. The highlight was the lower net loss. Management continues to crow about how Detroit loves its enterprise simulation strategy, but can only point to a few key sales wins -- none in the US automotive industry. A look at the competitive landscape makes us wonder how much longer MSC.Software can hold out.

MSC.Software (NASDAQ: MSCS) revenue for the third quarter of 2007, ending September 30, 2007, was $57.2 million, down 2% from $58.4 million in Q3 of 2006. MSC estimates the impact of foreign currency exchange at $1.3 million.

MSC.Software stock dropped more than 10% following the news, down to $11.45. It has since recovered a bit to $12.85.

Take a look at third quarter software revenue for the last three years:

  • 2005: $36.8 million
  • 2006: $22.7 million (down 39% from previous year)
  • 2007: $19.9 million (down 12% from previous year)

Management says the decline is due to lower sales of engineering products as a by-product of the continued transition to selling enterprise solutions, as well as from the impact of software products discontinued in 2006.

(Click for larger view)

Results by Region

Total revenue in the Americas for the quarter was $17.6 million, compared to $17.1 million year-over. Total revenue in EMEA for the quarter was $21.5 million, compared to $23.1 million year-over. Changes in the Euro/Dollar ratio increased EMEA revenue by $1.5 million.

In the Asia Pacific region, revenue for the quarter totaled $18.1 million, compared to $18.2 million year-over. Changes in the Japanese Yen decreased Asia Pacific revenue by $0.3 million in the quarter.


  • Our Take


The full article is available for a fee at CADCAMNet.


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