April 30, 2008 / 4:18 PM / 9 years ago

Open Text shares hit year high after strong results

(In U.S. dollars unless noted)

TORONTO, April 30 (Reuters) - Shares of business software maker Open Text Corp OTC.TO(OTEX.O) hit a year high on Wednesday after the company reported higher third-quarter results due to strong growth in license and customer support sales.

Shares of Open Text shot up C$2.10, or 6.1 percent, to C$36.65 on the Toronto Stock Exchange as investors reacted to the earnings report, released after the market close on Tuesday. On the Nasdaq market, they rose $2.35, or 6.9 percent, to $36.33.

“The company reported license revenue growth of 20 percent, which is the highest level we have seen in a number of years, and suggests potential market share gains,” Paradigm Capital analyst Gabriel Leung wrote in a note to clients.

He kept his “buy” rating on the shares and raised his 12-month target on the stock to $48 from $47, adding that aside from its growth, the company also remains “a very compelling acquisition target”.

On Tuesday, Open Text, which provides enterprise content management software, said it earned $7.3 million, or 14 cents a share, for the three months ended March 31. That was up from a profit of $3.9 million, or 8 cents a share, in the same period a year earlier.

The key adjusted profit figure hit 48 cents a share, up from 34 cents a year before.

Total revenue was $178.8 million, up 15 percent from $156.1 million a year earlier. License revenue jumped 20 percent to $51.5 million. Customer support revenue rose to $91.6 million from $79 million.

The results beat the expectations of analysts, who had expected the company to earn an adjusted 47 cents per share on revenue of about $175 million, according to Reuters Estimates.

$1=$1.01 Canadian Reporting by Wojtek Dabrowski; editing by Peter Galloway

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