Earnings Preview: Autodesk

Feb.22.10 | About: Autodesk, Inc. (ADSK)

Autodesk, Inc. (NASDAQ:ADSK) is set to release its fourth quarter fiscal 2010 results on February 23, 2010.

During its third quarter earnings release, Autodesk provided conservative guidance and forecast for the fourth quarter of 2010 was mixed, with earnings below consensus expectations and revenues in-line.

For the fourth quarter, Autodesk expects revenue to be in the range of $420-$440 million. Earnings on a non-GAAP basis are expected to be in the range of 19 cents to 24 cents a share, excluding 6 cents a share related to stock-based compensation expense and 6 cents a share for amortization of acquisition related intangibles.

Zacks Estimate Revisions Update

The current Zacks Consensus Estimate for the fourth quarter is earnings of 15 cents, below the company’s guidance, with a downside potential of 13.33%. Just 1 of the 18 analysts covering the stock made a downward revision.

The bearish stance taken by analysts reflects that they do not expect a significant improvement until the second half of fiscal 2011 (ending Jan. 2011). This may have a negative impact on the share price in the near term.

For the full fiscal 2010, net revenue is expected to be in the range of $1.68-$1.7 billion. Non-GAAP earnings per share [EPS] are expected to be in the range of 88 cents to 93 cents. However, the Zacks Consensus Estimate calls for 60 cents in EPS for the full year.

The company anticipates total non-GAAP pre-tax spending (operating expenses plus cost of goods sold) for fiscal 2010 to range between $1.42 and $1.43 billion. The company said that it is on track to deliver more than $300 million in pre-tax cost savings in fiscal 2010 compared to fiscal 2009.

Autodesk’s third quarter earnings beat the Zacks Consensus expectation but fell below the year-ago levels. However, earnings increased sequentially due to higher cost controls and improving end market demand.

Outlook

As the company witnesses stabilization in end-market demand, we expect recovery in fiscal 2011. Moreover, the company should be a major beneficiary of the global economic recovery and the rapidly improving IT spending environment. We believe Autodesk is well positioned for additional upside as it enters fiscal year 2011.

However, recovery will be slow in the near term due to intense competition from Dassault Systemes, Adobe Systems Inc. (NASDAQ:ADBE), Apple Inc. (NASDAQ:AAPL), Avid Technology Inc. (NASDAQ:AVID), Sony Corp. (NYSE:SNE).

Author's Disclosure: none