February 3, 2010 / 9:20 PM / in 8 years

UPDATE 2-Open Text profit surges as revenue jumps

* Q2 adjusted EPS $0.87 vs $0.64 year earlier

* Revenue up 19 pct at $247.8 mln (Adds details, analyst comments; in U.S. dollars unless noted)

By Susan Taylor

OTTAWA, Feb 3 (Reuters) - Business software maker Open Text Corp OTC.TO (OTEX.O) reported a sharp increase in second-quarter profit on Wednesday, boosted by strong revenue growth and cost savings from a recent acquisition.

The results topped expectations and were a marked rebound from the first quarter, reported in late October, when profit plunged 88 percent on delayed orders and a range of charges.

“They turned the corner, as far as the macroeconomic uncertainty out there,” said Dundee Securities analyst Dushan Batrovic in an interview.

“It’s been a rough 2009 and last quarter that they reported ... they missed across the board and so expectations heading into this quarter were quite low.”

Net earnings increased to $21.2 million, or 37 cents a share, in the quarter ended Dec. 31 from $800,000, or 1 cent, in the same period last year.

Adjusted profit rose to $50.1 million, or 87 cents a share, from $34 million, or 64 cents.

Revenue climbed by 19 percent to $247.8 million in the traditionally strong quarter as license revenue rose 12 percent to $72.7 million.

Analysts had expected earnings per share of 69 cents and revenue of $229.9 million, on average, according to Thomson Reuters I/B/E/S.

“Generally, it’s been a good quarter so far, from companies like Oracle and SAP, some of the big software bellwethers,” Batrovic said. “Open Text results are better than what the others have been so far.”

Waterloo, Ontario-based Open Text sells business management software, which allows people to work together, share, store and retrieve information.

The company, which bought Vignette Corp last year for its Web content management software, typically piggybacks its outlook to general information technology spending trends.

“We had a very good quarter across the board -- in all geographies and verticals,” said Chief Executive John Shackleton. “Our strong license revenue growth has brought us to where we expected to be on a year to date basis.”

Of the seven analysts covering Open Text two rate the stock a “hold”, two a “buy”, and three have it as a “strong buy”.

Before the results were released, Open Text shares dropped 4 cents to end at $40.55 on Nasdaq and fell 28 Canadian cents to C$43.03 in Toronto on Wednesday.

$1=$1.06 Canadian Reporting by Susan Taylor; editing by Rob Wilson

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