September 27, 2007 / 8:23 PM / in 12 years

UPDATE 2-Cognos second-quarter results beat expectations

(Adds CEO interview, after-hours stock price, details; In U.S. dollars unless noted)

By Wojtek Dabrowski

TORONTO, Sept 27 (Reuters) - Second-quarter profit at Cognos Inc CSN.TO COGN.O, Canada’s biggest software company, beat expectations on Thursday, as license, product-support and service revenues all moved higher.

Cognos, which makes software that helps companies evaluate performance, said it earned $26.5 million, or 31 cents a share, in the three months ended Aug. 31. That was up from a profit of $23.8 million, or 26 cents a share, in the same period a year earlier.

The results the forecast Cognos gave in June. Adjusted earnings per share also topped analyst expectations by 2 cents, according to Reuters Estimates.

Revenue rose 10 percent to $252.4 million from $229.9 million.

For the third quarter, Cognos said it expects revenue will be between $270 million and $285 million. It forecast diluted earnings of 36 cents to 44 cents a share and adjusted earnings of 45 cents to 53 cents a share.

The top end of the key adjusted earnings forecast range met but didn’t exceed analyst expectations, sending Cognos’s shares lower in electronic after-hours trading.

The stock was quoted at $41.30, down 2.7 percent from its regular-session close of $42.45 on the Nasdaq.

The company said that during the quarter, it signed nine contracts greater than $1 million. It also had 411 sales representatives, the most ever, up by 21 from the end of the first quarter.

“What’s working out well for us is our mainline solutions — Cognos 8 and our financial performance management solutions,” chief executive Rob Ashe said in an interview.

He said that while European and U.S. performance was solid, Asia presented a more mixed picture.

“We had good performance through the emerging markets of India, China (and) Korea and not as strong this quarter in Japan and Australia.”

Despite continuing competition, Ashe said the company remains confident the rest of 2007 will be strong.

“We’re feeling pretty good going into the second half of the year ... all primarily driven by a continued healthy market environment and a very good product pipeline.”

During the regular trading session, Cognos shares closed up 43 Canadian cents at C$42.78 on the Toronto Stock Exchange.

$1=$1 Canadian

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