BMC Gains on Improved Forecast

BMC Software, Inc. (Nasdaq: BMCS) climbed 6.69 to 22.31 Thursday after thecompany said revenue and earnings for the third quarter ended in Decemberwill be above previous expectations.

The Houston, Texas-based provider of e-business software and services saidrevenue for the quarter will be between US$375 million and $380 million.Earnings before special charges and other items will be 20 to 22 cents pershare, including a 2-cent gain.

Prudential Securities reportedly upgraded BMC shares to strong buy from holdafter the announcement. The news means “the worst is likely over for themainframe group,” Prudential said in a research note. BMC shares, the firmsaid, are “the cheapest play in the group.”

BMC was also among stocks boosted by a surprise Federal Reserve interestrate-cut on Wednesday. Fed policymakers cut their target for the keyfederal funds rate from 6.5 percent to 6 percent in a bid to revive thestalling U.S. economy. Analysts said the move is likely to prod companies toresume spending on information technology.

BMC has suffered all year from a slowdown in business. In October, BMCreported second-quarter revenue of $323 million, 22 percent below year-earlierlevels. Earnings before charges dropped 75 percent to $27.9 million, or 11cents per share. The company ended with a net loss of $12.5 million, or 5cents per share.

Max Watson, chairman, president and chief executive officer, said thecompany saw “a reluctance among customers to commit to large enterpriselicense transactions.”

The company’s shares are down from a 52-week high of 85.12, reached lastJanuary. In October, the stock set a low of 13.

BMC plans to report third-quarter results after the close of trading onJanuary 18th.

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