Parametric Tech to cut jobs; forecasts weak 2009

Jan 28 (Reuters) - Business software maker Parametric Technology Corp PMTC.O said it would cut about 250 jobs in the wake of a sharp drop in license revenue as deals dry up in a weakening economy.

The company, which reported first-quarter results in line with analysts’ expectations on Tuesday, cut its 2009 outlook and forecast a 35 percent fall in license revenue for the year.

Parametric said it expects the decline in large deal activity to continue and forecast a $5 million to $10 million sequential drop in second-quarter license sales.

The average large deal size in the first quarter fell to $1.8 million from $2.5 million a year ago, if one large deal of $10 million in the first quarter is not taken into account.

Analysts have said businesses are closely scrutinizing larger contracts, which may sometimes require approval from a company’s CEO or board.

Parametric, which finished the first quarter with 5,264 employees, said it would look to end the year with about 5,000 employees.

The company will incur $15 million to $20 million in restructuring charges in the second quarter.

Growth at the company’s maintenance and services business, which accounts for more than 70 percent of its annual revenue, is expected to vary from flat to modest.

For 2009, Parametric expects earnings of 90 cents a share, excluding items, on revenue of about $960 million.

In October, it had forecast profit of $1.35 to $1.40 a share on revenue of about $1.1 billion.

Analysts were expecting a profit of 96 cents a share and revenue of $998.4 million, according to Reuters Estimates.

Shares of the company, which makes software that helps manufacturers design new products, were trading up 3 cents at $9.43 in early morning trade on Nasdaq.

For alerts, please double-click on [ID:nWNAB4416] and [ID:nWNAB4600] (Reporting by Sayantani Ghosh in Bangalore; Editing by Saumyadeb Chakrabarty)