February 25, 2003 4:56 PM PST

Autodesk sees modest growth for 2003

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Drafting and design software giant Autodesk expects modest growth this year as the company lays the groundwork for several long-term initiatives, CEO Carol Bartz said Tuesday.

"We're looking at 6 (percent) to 9 percent growth," Bartz said after the company announced financial results for its fourth quarter and the 2003 fiscal year. "That would be considered low for us, based on the major product cycle we have coming up, but we're not expecting any significant change in the economy."

Autodesk went through several rounds of layoffs and enacted other cost-cutting measures in 2003, as the global economic downturn hit the construction industry and other key customer segments particularly hard. The company is best known for AutoCAD, the standard software architects use to create design documents.

The company on Tuesday reported fourth-quarter and fiscal-year results well below those posted a year ago. Net income for the quarter, which ended Jan. 31, was $6.4 million, or 6 cents per share, compared with $21.8 million, or 19 cents a share, in the same period a year ago. Net revenue for the quarter totaled $195.5 million, from $254 million a year ago.

Excluding restructuring costs and other one-time charges, fourth-quarter income was $8 million, or 7 cents a share. On the same basis, analysts polled by research firm First Call had predicted earnings of 5 cents a share.

For the year, Autodesk earned net income of $31.9 million, or 28 cents a share, on revenue of $824.9 million. That compares with income of $90.3 million, or 80 cents a share, on revenue of $947.5 million in 2002.

Looking forward, the company projected net revenue of $205 million to $210 million for the current quarter and earnings per share between 3 cents and 6 cents. For the 2004 fiscal year, the company estimates revenue between $875 million and $900 million and earnings per share between 50 cents and 60 cents.

Growth contributors include significant expansion in China, where revenue increased 40 percent quarter over quarter in the fourth quarter. China has long been a sinkhole for Autodesk and other high-end software makers because of rampant piracy, but recent changes in economic and trade policy are opening markets for software makers.

"As they join WTO (the World Trade Organization) and try to start their own software industry, things are starting to change," Bartz said. "This is going to be a many-step process. But we're finally getting some revenue, so it's nothing but positive for us."

Autodesk has also tried to insulate itself from economic uncertainty partly buying promoting subscription programs, where customers pay annual fees for access to the latest version of an application. Bartz said subscription revenue was up 6 percent for the quarter and 58 percent for the year, ahead of original projections.

"There'll be a time out there when most of our products will be on a subscription basis, but it's too early to tell when that'll be," she said.

Autodesk is also at the beginning of a complex, long-term effort to change how the architecture and construction industries work by getting them to eliminate paper documents such as blueprints in favor of electronic versions created by and shared with applications such as AutoCAD and Autodesk's Revit modeling program. Bartz said major customers are starting to listen, in part because of the economic climate.

"Two or three years ago, they were too busy to evaluate anything," she said. "Now we have time to talk about the document lifecycle, and customers are kicking the tires with new technology...Blueprints aren't going to disappear from construction sites overnight, but we're seeing thought leaders in each of our industries stepping up to the plate and trying new processes."

 

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