J.P. Morgan downgraded Documentum (DCTM) to neutral from overweight.
Analyst Sterling Auty says Documentum's second-quarter revenue shortfall came from delays in government contracts, the economy, and from a weak North Asia. He says this isn't a bad miss overall, but thinks the stock is unlikely to outperform until Documentum can show better license growth.
Meanwhile, Auty says margin expansion continues; non-GAAP earnings per share is still seen at 7 cents to 9 cents, meaning Documentum saved about $2 million more than he expected in the second quarter. He cut the 38 cents 2003 non-GAAP earnings per share estimate to 33 cents, and trimmed the $300.8 million 2003 revenue estimate to $278.3 million.
Also, Auty cut the 60 cents 2004 non-GAAP earnings per share estimate to 50 cents, and reduced the $345.3 million 2004 revenue estimate to $315.2 million.