Wednesday, Synopsys, Inc. (SNPS), an electronic design automation software and related service provider, reported a third quarter profit that more than doubled from last year, helped by a tax benefit as well as a 13% rise in revenues. On a non-GAAP basis, earnings came in ahead of analysts' estimate by five cents. The company issued a profit outlook for the fourth quarter below Street expectation, and guided full year 2008 earnings above analysts' estimates. The stock dropped over 7% in the extended trade.
Among others in the industry, Mentor Graphics Corp. (MENT) Wednesday reported a loss for the second quarter, compared to a profit last year, impacted by higher charges and a decline in system and software revenues.
Mountain View, California-based Synopsys said third quarter net income, on a GAAP basis, increased to $57.75 million or $0.39 per share from $24.86 million or $0.17 per share in the previous year.
Results for the quarter included a $17.3 million tax benefit associated with the settlement of an IRS tax issue for fiscal years 2000 and 2001.
On a non-GAAP basis, net income for the third quarter increased to $64.5 million or $0.44 per share from $47.7 million or $0.32 per share for the third quarter of fiscal 2007. On average, eight analysts polled by First Call/Thomson Financial expected earnings of $0.39 per share for the quarter.
Revenue for the period increased to $344.13 million from $304.10 million reported last year, exceeding Street projection of $339.60 million.
Segment-wise, revenue from Time-based license rose 15% to $289.25 million from last year, while Upfront license revenues advanced 8% to $20.56 million. Maintenance and service revenues rose 2% to $34.32 million from the same period last year.
Total cost of revenue increased 15% and total operating expenses advanced 2% from last year.
Year-to-date, net income increased to $143.58 million or $0.97 per share from $89.48 million or $0.60 per share reported in the prior year. Revenue for the period increased to $984.15 million from $897.24 million generated in the previous year.
Cash and cash equivalents at July 31, 2008 was $545.49 million, while it was $579.33 million at October 31, 2007. Accounts receivable for both periods were $143.61 million and $123.90 million, respectively.
Commenting on the results, Aart de Geus, chairman and CEO of Synopsys, said, "Our technology and product pipeline are strong throughout our broad portfolio, and we are seeing good competitive momentum. Even at a time of increased customer caution around spending, Synopsys continues to perform well."
Looking ahead to the fourth quarter, the company expects earnings, on a non-GAAP basis, of $0.36-$0.39 per share. On a GAAP basis, earnings are expected in the range of $0.23-$0.29 per share. Analysts currently expect earnings of $0.38-$0.41 per share with a consensus of $0.40 per share.
Revenue for the fourth quarter is estimated to range from $348 million to $356 million, while the Street currently looks for revenues of $354.35 million.
For the full year 2008, earnings on a non-GAAP basis are estimated in the range of $1.65-$1.68 per share, and on a GAAP basis, in the range of $1.20-$1.26 per share. Revenue for full year 2008 is projected in the range of $1.332 billion - $1.340 billion.
The Street currently expects full year earnings to range from $1.62 per share to $1.65 per share with a consensus estimate of $1.63 per share. Revenues are currently estimated at $1.33 billion for the year.
SNPS closed Wednesday's regular trade at $24.14, down $0.84 or 3.61% from the previous close, on 2.23 million shares. The stock dropped $1.89 or 7.83% in the extended session. For the past year, the stock trended in the range of $21.13-$29.11.
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