Informatica Corp. (INFA:US) slumped the most in 11 years after the provider of data-integration software said weak demand in Europe caused an unexpected drop (INFA:US) in quarterly sales and profit, sending down other software stocks.
The shares fell 28 percent to $31.39 at the close in New York, for the biggest daily decline since July 2001. The Redwood City, California-based company had risen 17 percent this year through yesterday.
Informatica released preliminary second-quarter results yesterday that trailed its own expectations, saying it didn’t adapt as rapidly as it should have to a downturn in demand, especially in Europe. Corporate customers reducing or deferring orders may also lead other software providers including Teradata (TDC:US) Corp., Citrix Systems Inc. (CTXS:US) and VMware Inc. (VMW:US) to reduce forecasts or miss earnings estimates, said Daud Khan, an analyst at Berenberg Bank.
“Companies are being far more cautious about spending,” Khan said in a telephone interview today. “Contracts have to be signed off by more people, which makes it difficult to get software deals done.”
Teradata, based in Dayton, Ohio, fell 10 percent to $65.01 at the close. MicroStrategy Inc. (MSTR:US) decreased 11 percent to $119.57, while QLIK Technologies Inc. (QLIK:US) fell a record 12 percent, to $17.97. QLIK has fallen 26 percent this year.
Citrix slid 7.6 percent to $77.45 and VMware fell 6.9 percent.
In Europe, Software AG (SOW) and SAP AG (SAP) also slumped. Software companies will probably lower full-year forecasts amid negative macro-economic data, Khan said in a research report.
Industry-wide trends were responsible for less than half of Informatica’s earnings miss, said Karl Keirstead, an analyst at BMO Capital Markets, in a research report.
“It would be a mistake to make a linear extrapolation to other software names,” said Keirstead, who rates the shares market perform.
Sales fell to about $188 million to $190 million in the period ended June 30, and earnings before certain items dropped to 27 cents to 28 cents a share, Informatica said in a statement yesterday after the markets closed. Analysts anticipated $217.4 million in revenue and 36 cents in earnings-per-share, according to predictions compiled by Bloomberg.
Informatica will report complete second-quarter results on July 26. In the second-quarter last year, the company posted revenue of $192.7 million on earnings-per-share of 33 cents, excluding items such as costs and tax benefits related to the amortization of acquired technology and intangible assets and stock compensation.
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