UPDATE 3-Autodesk Q4 profit estimate lower than Street view

Tue Nov 17, 2009 9:13pm EST

* Q3 EPS ex-items 27 cents vs Street view 23 cents

* Q3 revenue $416.9 mln vs Street view $415.2 mln

* Sees Q4 EPS ex-items 19-24 cents vs Street view 25 cents

* Sees Q1 operating margin ex-items flat to slightly down

* Shares down 9.1 pct after-hours (Adds CEO and analyst comment, background on margins; updates shares)

By Ian Sherr

SAN FRANCISCO, Nov 17 (Reuters) - Autodesk Inc (ADSK.O) gave a fourth-quarter earnings outlook on Tuesday that was lower than Wall Street expectations, and the software maker said that its recovery could be hindered by continued job losses in its core markets.

"Economies may be recovering in terms of GDP, but jobs are still being lost and that is a key component to Autodesk's recovery," Chief Executive Carl Bass said on the company's quarterly conference call.

Autodesk relies on subscription-based sales, licensing its software per user at a company.

The company's shares fell 9.1 percent in after-hours trading.

The company, which makes the AutoCAD design software for architects and designers, posted a third-quarter profit that beat analysts' expectations.

Autodesk's operating margin for the third quarter was just over 6 percent, compared with 23 percent at the same time last year.

Bass said that while the company could return to operating margins of yesteryear, it has made a strategic decision to keep from making too many cost cuts so as to take advantage of the recovering economy as it happens.

"We've always said we can return to mid 20s to 30 percent operating margin at almost any revenue level," he said. "We try to get ahead of the downturn by making cuts early, but we want to make sure we have the appropriate structure in place and the appropriate resources as we go forward to make sure we can really take advantage of this."

"We're very excited about the market position we have," he added, "and we don't want to miss out on that when the recovery comes."

Expense guidance got to investors, though, said Robert W. Baird & Co analyst Steven Ashley.

"The focus by investors is going to be on expense guidance, and the expense guidance going forward was simply higher than anticipated," he said.

The company said it expects first quarter 2011 operating margins, excluding items, to be flat to slightly down from the previous year. The company attributed the decrease to normal seasonality and the return of certain costs that were suppressed in the year-ago period.

Pacific Crest Securities analyst Brendan Barnicle said the stock's after-hours fall was best attributed to expectations of investors, which may have outpaced what companies can deliver.

This was similar, he said, to what happened to software maker Salesforce.com Inc (CRM.N), which reported a slowdown in new business on Tuesday. Its shares also fell. [ID:nN1739572]

Autodesk "blasted through their earnings, there's no doubt about that," Barnicle said. "It's just that their guidance for the next quarter isn't 5 cents above where the Street was already."

FORECAST

Autodesk forecast earnings per share, excluding items, for the current quarter of 19 cents to 24 cents, on revenue of $420 million to $440 million. Analysts were looking for profit per share of 25 cents on revenue of $433.5 million, according to Thomson Reuters I/B/E/S.

Autodesk also said it would not forecast revenue for fiscal 2011, but did say it expects first quarter operating margins, excluding items, to be flat to slightly down. Still, the company saw "modest improvement" in non-GAAP operating margin for fiscal 2011 compared with the previous year.

Net income for the third quarter fell to $29.5 million, or 13 cents a share, in Autodesk's fiscal third quarter ended Oct. 31, from $104.5 million, or 45 cents a share, in the year-ago period.

Excluding items, profit was 27 cents a share, ahead of the average analyst estimate of 23 cents a share, according to Thomson Reuters I/B/E/S.

Revenue fell 31 percent from a year earlier to $416.9 million, close to the average estimate of $415.2 million.

The San Rafael-based company's shares fell to $24.55 in extended trading after closing on the Nasdaq down 1.6 percent at $27. (Reporting by Ian Sherr; editing by Andre Grenon and Carol Bishopric)

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