Knobias Clip Report (10-22-2008) MANH
Submitted By Knobias ClipReport
MANH: Hits Multi-Year Low on Q3 Results and Guidance; Comments on Workforce Cuts
By Fain Hughes, fhughes@knobias.com
Shares of Manhattan Associates, Inc. (MANH) plunged to a multi-year low on Wednesday after the Company reported its financial results for the third quarter ended September 30, 2008.
Consolidated revenue decreased 2% to $82.7 million and license revenue decreased 20%, to $13.8 million. Diluted earnings per share, on a non-GAAP basis, remained unchanged at $0.34 per share for each of the quarters ended September 30, 2008 and 2007.
The Company expects Q4 non-GAAP EPS of $0.24 to $0.34, and FY08 non-GAAP EPS of $1.36 to $1.46.
Pete Sinisgalli, President and CEO, commented in a conference call, “Despite entering Q3 with a strong pipeline, toward the end of the quarter we saw a significant number of deals slip into Q4 and perhaps beyond in this global economic crisis. While we are disappointed in our 20% decline in license revenues, the silver lining is that our competitive win rate remains quite strong. We expect that as capital markets and the global economy return to healthier levels, our license revenue performance will improve substantially.”
He continued, “While our Q4 pipeline, which includes oppurtunities we intended to close in Q3, is very strong. Our current market outlook assumes that market pressures will continue through Q4 and into 2009.
Manhattan Associates also announced that, based on its view of intermediate-term market demand, it has identified over-staffed areas and eliminated approximately 150 positions worldwide to realign capacity with demand forecasts. The adjustment represents fewer than 7% of about 2,300 associates worldwide.
Mr. Sinisgalli explained, “The expectations for new software and services revenues that we built into our original 2008 plan are no longer aligned with our current market outlook. Because we staffed our business based on higher expectations, we created capacity beyond our current view of market demand. More than half of those 150 positions were in our professional services segment. The one time cost of this initiative is about $7 million. The savings will amount to about $14 million annually.”
He concluded, “We are making solid progress on our product and technology roadmap. We believe that we are creating very real differentiations from all other supply chain solution providers with our investments in R&D. We continue to expand our market share and extend our lead in supply chain solution markets, and we look forward to the time when our markets return to normal buying patterns. However, we are realistic and recognize the need to adjust our plans to today’s realities. We remain very confident in our long term future.”
ThinkPanmure downgraded MANH to Source of Funds from Accumulate following the weak Q3 report and guidance. The firm also cut its price target to $16 from $21.
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