Poor Sales Sink Autodesk's Q1

License sales head south, helping to constrict revenue by 29%, as the company sinks into the red and turns to more layoffs to help right its ship.

Posted on May 22, 2009

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Design software purveyor Autodesk swung to a loss in its fiscal first quarter, as sales plummeted 29% on continued weak demand for the company’s 2D and 3D design products. The first three months of fiscal 2010 leading up to April 30, 2009, proved to be a familiar recipe for Autodesk, as license sales slowed markedly and well-received maintenance offerings prevented an even larger top-line decline. The 29% sales drop brought revenue to $425.8 million, from $598.8 million in the prior-year first quarter. Of that total, maintenance sales contributed $182.2 million — a 9% jump — while the bottom dropped out on “license and other” sales, which nose-dived 44% to $243.6 million. The bottom line followed suit, as the company reported a loss of $19.4 million, compared with income of $119.9 million in the first three months of fiscal 2009. That translated into a loss per diluted share of $0.14, compared with income per share of $0.41 a year earlier. “From our point of view, the global markets are still in decline,” said CEO Carl Bass on a conference call with investors Thursday. Though the level of recession has moderated, he said, the company has seen no indications of an imminent recovery. Geographically, he said, his concern has shifted. “My nervousness is clearly more outside of North America these days than it was in the last few quarters, where we experienced the greatest declines in North America.” Declines in North America have ebbed recently, leaving Bass to worry about areas of Western Europe, for instance. The United Kingdom, he said, has mirrored some of the United States’ recent woes, crimping customer demand there, while countries such as Germany and France have held up “pretty well,“ he told analysts. In an effort to stem the bleeding, Autodesk in January announced a layoff program that affected nearly 10% of its workforce. Soon after, Bass said, it became clear that such measures were insufficient and that “we had more work to do to take additional costs out of our structure.” In April, the company announced a plan to strike an additional $120 million from the operating budget, hoping to bring the combined savings of both plans to $250 million in 2010. The April announcement called for reductions in discretionary spending, contingent labor, and a restructuring. “The restructuring plan will result in a staff reduction of approximately 430 and the closure of certain facilities. The staff reduction will be partially offset by the hiring of approximately 100 key positions in select areas,” the company said in a statement. In its outlook for the second quarter, which runs through July, Autodesk predicted revenue of $395 million to $420 million, with a loss per diluted share of $0.09 to $0.03. In last year’s second quarter, revenue totaled $619.5 million, and the company earned $0.39 per diluted share.

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