SumTotal raises Q4 outlook
Shares of SumTotal Systems, Inc. (Nasdaq: SUMT), a provider of talent and learning management solutions, are getting a raise today on news of an improved outlook for the fourth quarter and the entire fiscal 2007 year.
The Mountain View, Calif.-based company unveiled a forecast projecting that earnings for the three months ended Dec. 31 will be between $1.5 million and $1.8 million, or $0.05 per share and $0.06 per share. Eight analysts polled by Thomson Financial were expecting a net income of $0.03 per share.
SumTotal Systems also projected that fourth-quarter revenue will be between $33.2 million and $33.6 million, above Wall Street’s consensus view of $28.82 million in revenue.
“I am pleased with our fourth-quarter results,’ said CEO Don Fowler in a statement. “Led by a very strong quarter in North American enterprise sales, we saw strength in all areas of our business.”
The new numbers are an improvement over SumTotal Systems’ previous guidance, which called for a profit between $0.5 million and $1.5 million, or $0.02 per share and $0.05 per share, while revenues were estimated at between $28 million and $30 million.
“This is a positive data point following three quarters of missing expectations,” said Nathan Swanson, managing director and senior software analyst at investment bank ThinkEquity Partners, in a phone interview. “The deals they made earlier in the year finally came though.”
Looking forward, Swanson explained that he is “cautiously optimistic” about the company’s prospects. The one major factor affecting the company this year is the unemployment rate and the state of the overall economy, according to the analyst
“Historically, at least during the last downturn, training budgets were one of the first areas to get cut,” Swanson said. Additionally, SumTotal Systems is exposed to the ailing financial sector and could be negatively affected.
“The long-term trend is up, bit not for the first half of 2008,” he said.
For the entire 2007, SumTotal Systems projects revenues of between $122.8 million and $123.2 million, for a net income of between $0.22 per share and $0.23 per share. The forecast is above Wall Street’s projections of $118 million in revenue and a net income of $0.21 per share.
Swanson currently has an “accumulate” rating on the stock and a target price of $7 and said that he will not consider making changes until the company announces its final results on Feb. 5, 2008.
At 3:53 p.m. ET, shares of SumTotal Systems (SUMT) had advanced $0.58, or 15%, to $4.56. The 52-week high of $8.95 was touched on April 9, 2007, while the 52-week low of $3.81 was established on Jan. 11.
