Autodesk Stock Jumps On What Its CEO Omitted

Sometimes, it’s not about what you say. Sometimes, it’s about what you don’t say. Consider, for instance, Autodesk’s (ADSK) announcement for revenue for its fiscal third quarter ended October 31. Revenue came in at $457 million, in line with Street expectations.

The company did not report full financial results due to its ongoing internal stock options review. Carl Bass, the company’s president and CEO, described the quarter as “very solid,” and noted that the company is seeing increasing adoption of its 3D software products, as well as strength in emerging economies, which now account for 15% of revenue. The company says it continues to gain market share.

The company said fiscal fourth quarter revenue should be $490 million to $500 million, consistent with the Street estimate of $496 million. For all of fiscal 2007, it puts revenues at $1.832 billion to $1.842 billion, in line with the Street’s view at $1.84 billion. For 2008, the company sees revenue of $2.075 billion to $2.125 billion, versus the Street at $2.1 billion. The company sees pro forma operating margins increasing 1 to 1.5 percentage points next year.

So really, no surprises. But the underlying story is that there was nervousness on the Street about Autodesk’s quarter. In particular, the thinking was that the company might be vulnerable to a slowing economy in general, and in particular to a slowdown in the construction business, given that the sector is one of the company’s most significant customers. The slowdown did not materialize, though, and with the solid outlook from the company, the pressure came off the shares, and the stock on Friday took off.

The commentary from the Street Friday morning was pretty consistent; the numbers were good, the worries are eased. A few excerpts:

• Steven Ashley, Robert W. Baird: In line guidance…was a welcome relief to some investors who had been nervous about the prospects for the industrial economy…
• Philip Winslow, Credit Suisse: The continued migration of Autodesk’s large installed base, consisting primarily of 2d AutoCAD products, to the company’s higher-priced 3D solutions represents the most significant revenue opportunity for Autodesk, and Autodesk’s continue strength again this quarter in 3D sales reinforces our confidence in this long-term revenue growth driver…maintaining Outperform rating…raising our target price from $42 to $46. (Kudos to Winslow, who turned bullish on the stock in September with the stock in the low 30s.)
• Richard Davis, Needham: Autodesk has been under a remarkably constant and strident negative commentary assualt. Despite these fears, Autodesk reported another good quarter…raising estimates and price target to $49 (was $47.)
• Brent Thill, Citigroup: Despite some investor fears, results were solid…There had been some market concerns that [third quarter] results might be weak, as some cautioned of weakness in Japan, while others pointed to mixed anecdotal data from resellers…Demand remains strong…Maintain Buy.

There are a lot more notes on Autodesk sitting here on the floor of my office, but you get the idea.

Oh, you know who else made a nice call on Autodesk…uh, me. (I can’t link to it, but I wrote a bullish column on the company in the November issue of Smart Money.)

Autodesk shares on Friday jumped $3.55, or 9.6%, to $40.55.

See: Autodesk Q3 2006 Earnings Call Transcript