Peregrine Signals Disappointing 3Q Earnings

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Peregrine Systems said it expects to report a pro forma loss of seven to 8 cents per share on revenue of $175 million for its third fiscal quarter ended Dec. 31, 2001.

The company cited economic conditions, particularly in Europe, as part of the reason for its woes as well as declining sales to managed services providers (MSPs) such as EDS.

The $175 million figure means revenue will be flat, compared with the year-ago quarter.

The pro forma figures do not include about $75 million in costs associated with acquisitions of Remedy, Harbinger and Extricity, as well as restructuring charges. If those charges were included, the loss would be between 32 cents and 33 cents per share. Final numbers will be announced Jan. 24.

Peregrine, which makes software infrastructure management software, last June bought rival Remedy for a $1.08 billion.

Charles Phillips, an analyst at Morgan Stanley, said in a research note that Peregrine's subsequent focus on integrating that acquisition boosted sales of Remedy products, but "the rest of the company paid a high price." The $175 million revenue figure for last quarter came in $43 million short of Morgan Stanley's estimates.

Phillips reduced his earnings estimates for the fiscal fourth quarter and fiscal 2002 and 2003. He now expects the company to earn 13 cents per share for fiscal 2003 and assumes an operating loss of 9 cents per share for the fourth quarter. He expects the company to turn a profit in the second quarter of fiscal 2003, ending September 2002.


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