Sales slowdown at Rational, BMC

Rational Software Corp. and BMC Software, top suppliers to IT development shops, have both warned that earnings and revenues for the current quarter will fail to meet analyst expectations due to a slowdown in corporate technology purchases.

Rational officials said the firm now expects to report revenues of between $172 million and $176 million for the quarter ending June 30, with pro-forma earnings in the range of 7 cents to 8 cents per share. The company projected software license revenue to be between $79 million and $83 million. Prior to the announcement, analysts were projecting $185 million in revenues and earnings of 8 cents a share for the quarter.

In a conference call with analysts and reporter, Chairman and Co-Founder Paul Levy said the fiscal period was "more challenging than we anticipated—we saw a large fall off in our international business right at the end." "Business is tougher for everyone," Levy said. He also maintained that sales of the Rational suite of tools remained strong.

Meanwhile, BMC now estimates first quarter revenues of between $338 million and $345 million, 3 percent to 5 percent less that previously projected. Earnings are now projected to be between $15 million and $20 million.

"The current economic environment is challenging," said Bob Beauchamp, president and chief executive in explaining the shortfall. He did add that between $30 million and $33 million in gross bookings went into deferred license revenue during the quarter.

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About the Author

Mike Bucken is former Editor-in-Chief of Application Development Trends magazine.