Weak Economic Environment Hurting Software Companies
The ShinesRooms.com Provides Stock Research on Autodesk Inc. and PTC Inc.
NEW YORK, NY -- (Marketwire) -- 02/05/13 -- The weakness in the global economic environment in the last few years has had a negative impact on the technical and systems software industry. Although the global economy is showing signs of improvement, companies such as Autodesk and PTC Inc. face challenges in the near-term. Since the financial crisis of 2008, the global economy has struggled. The global economic recession in 2009, the Eurozone debt crisis and the fiscal cliff issue in the U.S. have hurt business confidence. Given the weak environment, businesses have cut spending on technology in the last few years.
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However, the global economy is showing some signs of improvement. Recent economic data from China has been encouraging. In the U.S., apart from the disappointing fourth quarter GDP data, economic data has generally been solid, pointing to a recovery. The Eurozone has stabilized as concerns over the debt crisis have eased, although the region is still not showing any signs of growth. Finally, the last-minute fiscal cliff deal has lifted sentiment. Despite the positive developments, there are still challenges in the near-term.
A couple of weeks back, PTC reported its financial results for the first quarter ended December 29, 2012. The company's revenue for the first quarter was flat, highlighting the weak economic environment. The company's non-GAAP earnings for the quarter rose 3%, mainly due to an improvement in margins. James Heppelmann, President and CEO of PTC, said then that given the economic environment, the company is pleased with its first-quarter results.
Heppelmann further said that the company continues to be excited about its long-term growth opportunity based on the strength of its pipeline, market acceptance of its products in core markets, as well as significant interest the company is seeing in its broader solution areas. The CEO added that while the slowdown in global manufacturing and uncertainty about near-term economy remains a headwind for revenue growth, the company is committed to driving operating margin expansion.
For the second quarter of fiscal 2013, PTC forecasts non-GAAP revenue to be between $305 million and $325 million, with license revenue expected to be between $70 million and $85 million. Full-year non-GAAP revenue is expected to be between $1.34 billion and $1.37 billion.
Back in November, another player in the Technical & System Software industry, Autodesk, reported disappointing revenue results for its third quarter of fiscal 2013. Carl Bass, the company's CEO, cited weakening demand environment as the reason for the feeble revenue results. Bass noted that while the company experienced pockets of relative strength in the U.S., northern Europe, and Russia, most other markets around the world slowed during the quarter, most notably emerging markets.
Like PTC, Autodesk is also looking to improve operating margin in a weak economic environment. Meanwhile, Autodesk has made some acquisitions to boost its offerings. Earlier this month, the company announced that it would acquire PI-VR in order to strengthen and enhance its expertise in and offerings of automotive visualization. The company also completed the acquisition of Allpoint Systems Technology in January.
Autodesk will be reporting its earnings on February 25th.
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