Wall Street Beat: Business software, e-commerce shine

BMC, NetSuite report revenue gains, as ComScore stays upbeat on consumer e-commerce

With most tech bellwethers having reported financial results, the earnings season is coming to a close, but BMC, NetSuite, AOL and IAC results this week offered insights into aspects of business IT and the Internet sector.

In addition, comScore Friday had good news for e-commerce, reporting that 2010 fourth-quarter online retail sales estimates reached a record US$43.4 billion, an increase of 11 percent compared to the year-earlier figure. The growth was the fifth consecutive quarter of year-over-year increases, comScore said.

Market growth in the tech sector recently has been ascribed mainly to strong sales for business IT vendors, but the comScore figures come as a vote of confidence in the consumer retail arena.

"Retail e-commerce had a strong fourth quarter, growing 11 percent versus last year as holiday season spending was bolstered by an improving sentiment among some consumer segments and by retailers' discounting and promotions," said comScore Chairman Gian Fulgoni in a statement.

During the week, vendors of corporate software reported strong sales, echoing results from their larger counterparts earlier in the season.

Business service and automation software maker BMC Wednesday reported that revenue for the quarter ending Dec. 31 was $540 million, a record and up 6 percent from the year earlier. Net income was $109 million, down from $111 million a year earlier. Excluding one-time charges, however, income was $143 million, up 1 percent from 2010.

BMC looks well-positioned, reporting $594 million in bookings for the quarter, up 10 percent from the year-earlier period.

"Our service automation, SaaS, and cloud solutions all continue to show strong increases in customer demand," said Bob Beauchamp, BMC's chairman and chief executive officer, in the company's earnings statement.

BMC remains bullish on the year, forecasting a earnings per share of $2.92 to $3.02, compared to estimates of $3 by analysts polled by Thomson Reuters.

Another enterprise software maker reporting an increase in sales was NetSuite. The hosted business software maker Thursday said total revenue for the fourth quarter of 2010 was $52.1 million, a 21 percent year-over-year increase. The company continues to lose money, though losses are narrowing slightly. The company's fourth-quarter loss was $6.4 million compared to a loss of $6.5 million a year earlier.

There were also mixed results reported by Internet companies this week, as AOL said quarterly revenue declined by 26 percent to $596 million. The company, in the middle of a turnaround effort led by CEO Tim Armstrong, a former Google executive, was hit by a sharp 29 percent drop in ad revenue, to $331.6 million. Earnings were $66.1 million, a sharp increase from $1.4 million a year earlier -- but the year-earlier figure suffered from a one-time $106 million restructuring cost.

As a result of higher-than-expected cost reductions, the company's earnings per share beat expectations.

"I am very proud of what we accomplished in 2010 as we began the year with a significant restructuring of AOL and ended the year with a significantly improved balance sheet, a number of exciting new products and a new culture focused on winning," said Armstrong in a statement.

It will take more than cost cuts, however, to turn around its ad sales efforts as it goes up against Google, the dominant giant in the business.

On the the other hand, IAC, the Internet group that owns search sites including Ask.com and Dictonary.com, seems to have built up momentum lately, matching Google's growth rate (though from a much smaller base). The company Wednesday reported a 27 percent jump in revenue, to $451.4 million, and a profit of $87 million, compared to a loss of $1 billion in the year-earlier period. The year-earlier loss was due mainly to huge write-downs in its search properties.

IAC said its sales increase was largely a result of increasing revenue from the company's toolbars, which allow users to see information from search results without actually visiting websites.

The tech-heavy Nsdaq was headed to close higher, at 2769, up by 15.42 Friday afternoon. The Dow was up 28 at 12091 and the S&P was up 3.77 to 1310. Strong tech results have been a big market driver, but government figures Friday showing that the unemployment rate fell last month to 9 percent -- the lowest point since April 2009 -- likely boosted confidence.

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Tags internetbusiness issuesadvertisingsoftwaremiddlewarefinancial resultsnetsuiteAOLComScorebmcInternet-based applications and servicesIAC

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Marc Ferranti

IDG News Service
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