BMC Gains on Improved Forecast

BMC Software, Inc. (Nasdaq: BMCS) climbed 6.69 to 22.31 Thursday after the company said revenue and earnings for the third quarter ended in December will be above previous expectations.

The Houston, Texas-based provider of e-business software and services said revenue for the quarter will be between US$375 million and $380 million. Earnings before special charges and other items will be 20 to 22 cents per share, including a 2-cent gain.

Prudential Securities reportedly upgraded BMC shares to strong buy from hold after the announcement. The news means "the worst is likely over for the mainframe group," Prudential said in a research note. BMC shares, the firm said, are "the cheapest play in the group."

BMC was also among stocks boosted by a surprise Federal Reserve interest rate-cut on Wednesday. Fed policymakers cut their target for the key federal funds rate from 6.5 percent to 6 percent in a bid to revive the stalling U.S. economy. Analysts said the move is likely to prod companies to resume spending on information technology.

BMC has suffered all year from a slowdown in business. In October, BMC reported second-quarter revenue of $323 million, 22 percent below year-earlier levels. Earnings before charges dropped 75 percent to $27.9 million, or 11 cents per share. The company ended with a net loss of $12.5 million, or 5 cents per share.

Max Watson, chairman, president and chief executive officer, said the company saw "a reluctance among customers to commit to large enterprise license transactions."

The company's shares are down from a 52-week high of 85.12, reached last January. In October, the stock set a low of 13.

BMC plans to report third-quarter results after the close of trading on January 18th.