MSC.Software Third Quarter was One to Forget
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Randall S. Newton, December 14, 2006 MSC.Software
Corporation (NASDAQ: MSCS) reported a depressing third quarter, but says the
worst is over. Total revenue for the three months ending September 30, 2006
was $58.4 million compared to $75.6 million for the same period in 2005, a
decline of 23%. MSC CEO Bill Weyand attributes the poor numbers to the
company's transition to selling enterprise software platform applications
and a resulting increase in the sales cycle. Since announcing these results,
MSC has launched a new software line and reinvigorated a sales partnership.
The GAAP loss was $0.04 a share, compared with GAAP earnings of $0.14 a
share a year ago. Software revenue for the period were $22.7 million
compared with $36.8 million year-over, a decline of 39%. MSC advises the
steep decline can be partially attributed to a net restatement adjustment in
the third quarter of 2005 for $7 million. Maintenance revenue in the third
quarter totaled $28.9 million and services revenue totaled $6.8 million,
compared to $28.2 million of maintenance revenue and $10.5 million of
services revenue for the same period in 2005.
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MSC has announced an expanded partnership with INCAT, a reseller of MCAD
and PLM products and services. The new relationship targets the same SMB
ambitions as MCAD and PLM vendors, except that MSC and INCAT are focusing on
the simulation market. With the exception of MSC, the simulation market is
booming as it becomes more affordable—and more necessary—to run multiple
simulations for all the various parts in an assembly. In July Weyand told
CADCAMnet that MSC doesn’t intend to focus solely on large customers; he
also plans to beef up the company’s lower-cost point solutions to sell
through a future network of independent dealers.
Breaking the quarter down by geographic units, total revenue in the
Americas was $17.1 million, a decrease of 15.8% compared to $20.3 million
last year. Total revenue in EMEA was $23.1 million, a decrease of 13.4%
compared to $26.7 million last year. In Asia Pacific total revenue was $18.2
million, a decrease of 36.5% compared to $28.6 million last year.
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