Software vendors Computer Associates (CA) and BMC have blamed weak mainframe software sales for their separate profit warnings, with the former also attributing the shortfall to a poor performance in Europe.
CA said it would report revenue of $1.25bn, or earnings per share of between 26 cents and 31 cents, for its fiscal first quarter results ended 30 June. Wall Street had expected revenue of $1.6bn, or earnings per share of 55 cents. Its shares plunged 45 per cent on the news.
Fellow enterprise software developer BMC also warned yesterday that its fiscal first quarter results would miss analysts' expectations, again attributing the problem to slow mainframe software sales.
Sanjay Kumar, president and chief operating officer at CA, said: "Business in the just-finished quarter wasn't as strong as we had hoped, as a result of weak European sales and soft demand for the company's mainframe software."
"Our performance internationally is not acceptable. The company was unable to shake the historical slow sales in France and Germany. They didn't perform much better than historical numbers and that's a major disappointment for us," he added.
Kumar said customers were concerned about possible changes in IBM System 390 mainframes which are expected to involve either new architectures or price updates. He also said the company missed closing several deals worth between $10m and $50m towards the end of the quarter.
Meanwhile, shares of BMC fell by more than a third after it warned that its first quarter results would not meet expectations. It expects to report net earnings of between $47m and $51m, or earnings per share of between 18 cents and 21 cents. Wall Street had predicted earnings of 46 cents a share for the three months ended 30 June.
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