Will Opsware Even Make Money? OPSW
When Opsware (OPSW), the provider of information technology automation software, announced Q1 earnings for the period ending April 30, there was great fanfare about beating forecasts and raising guidance. But, where's the profit?
Revenue rose to $21 million from $12.6 million a year ago. But, expenses rose to $28.7 million from $18.4 million last year. The operating loss for the quarter was $6.7 million up from $5.7 million. When revenue rises, shouldn't the loss go the other way? At least the company is becoming less reliant on revenue from EDS.
In Q2 of the fiscal, ending July 31, the company expects revenue to inch up to $23 million or a bit more. Perhaps Opsware can increase the loss as well. But, the company says it will breakeven. Skeptics abound. The stock dropped 6% to $7.60 on the news. The 52-week high/low is $9.25/$4.17.
Opsware's revenue tripled from the period ending January 31, 2004 to January 31, 2006, but the operating loss got worse going from $14.2 million to $17.7 million on this significant increase in top-line.
Opsware's claims about its software are fairly extraordinary: "Opsware provides the only enterprise automation software on the market to bring together management of business services, UNIX automation, Linux automation, and Windows automation servers, software, applications, network devices, and asset tracking". But, if this is the case, investors have to wonder why the company only does $21 million a quarter.
The stock now trades at an eye-popping 13 times sales.
Opsware rarely traded much above $5 from June to November 2005, and with shareholders selling into the earnings news, it may just go back there again.
Douglas A. McIntyre
Revenue rose to $21 million from $12.6 million a year ago. But, expenses rose to $28.7 million from $18.4 million last year. The operating loss for the quarter was $6.7 million up from $5.7 million. When revenue rises, shouldn't the loss go the other way? At least the company is becoming less reliant on revenue from EDS.
In Q2 of the fiscal, ending July 31, the company expects revenue to inch up to $23 million or a bit more. Perhaps Opsware can increase the loss as well. But, the company says it will breakeven. Skeptics abound. The stock dropped 6% to $7.60 on the news. The 52-week high/low is $9.25/$4.17.
Opsware's revenue tripled from the period ending January 31, 2004 to January 31, 2006, but the operating loss got worse going from $14.2 million to $17.7 million on this significant increase in top-line.
Opsware's claims about its software are fairly extraordinary: "Opsware provides the only enterprise automation software on the market to bring together management of business services, UNIX automation, Linux automation, and Windows automation servers, software, applications, network devices, and asset tracking". But, if this is the case, investors have to wonder why the company only does $21 million a quarter.
The stock now trades at an eye-popping 13 times sales.
Opsware rarely traded much above $5 from June to November 2005, and with shareholders selling into the earnings news, it may just go back there again.
Douglas A. McIntyre
posted by douglas mcintyre at 12:28 PM
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