MSTR: MicroStrategy Looking More Micro, Less Strategic
MicroStrategy (MSTR) reported earnings:
First quarter 2007 revenue was $72.4 million versus $69.5 million for the first quarter of 2006, a 4% increase. Product support and other services revenue for the first quarter of 2007 was $55.7 million versus $46.4 million for the first quarter of 2006, a 20% increase. Product support and other services revenue increased primarily due to an increase in the installed base of technical support contracts. Product licenses revenue for the first quarter of 2007 was $16.7 million versus $23.1 million for the first quarter of 2006, a 28% decrease. The decrease in product licenses revenue was due, in part, to the absence of any license transactions in excess of $1.1 million during the first quarter of 2007.
First quarter 2007 income from operations was $14.7 million, or 20% of revenue, versus $21.0 million, or 30% of revenue, for the first quarter of 2006. Net income for the first quarter of 2007 was $9.8 million, or $0.75 per share on a diluted basis, versus $15.0 million, or $1.05 per share on a diluted basis, for the first quarter of 2006.
Analysts were expecting the company to earn $1.27 on $81 million in sales, so this was quite a miss. The license revenue they lost is both highly profitable and a key driver of future services growth. MicroStrategy thus joins BEA Systems (BEAS) among those hardest hit by the weak corporate spending on equipment and software.
The press release spent a good deal of time talking up the recent release of MicroStrategy 8.1 and how the company is promoting its use:
MicroStrategy plans to host a one-hour webcast, “Using Dashboards to Improve Corporate Performance: Top 10 Best Practices,” on May 16, 2007. Showcasing MicroStrategy’s Dynamic Enterprise Dashboards, the webcast will feature demonstrations, commentary from MicroStrategy customers Lowe’s Companies and Classic Residence by Hyatt, as well as insights from Wayne Eckerson, Director of TDWI Research, and author of Performance Dashboards: Measuring, Monitoring, and Managing Your Business. For more information and to register for the event, visit http://www.microstrategy.com/DashboardsTop10.
Unfortunately, this strategy doesn’t appear to be particularly effective:
In the first quarter of 2007, MicroStrategy held a series of events in 45 locations around the world to launch its Dynamic Enterprise Dashboards. More than 2,000 people attended the half-day events, which featured customer presentations and demonstrations of the new MicroStrategy dashboard capabilities.
If only a few of those in attendance had actually ponied up for the license fee, we’d be a little less cynical about this one. Investors don’t reward companies based on how long the press release is. Until MicroStrategy starts putting up some numbers we don’t care about their symposia, webcasts or shindigs.
Like this article? Why not try out:
