Informatica Corp. slumped the most in 11 years after the provider of data-integration software said weak demand in Europe caused an unexpected drop in quarterly sales and profit, sending down other software stocks.
The shares fell 28 percent to $31.39 at the close in New York, for the biggest daily decline since July 2001. The Redwood City, California-based company had risen 17 percent this year through yesterday.
Informatica released preliminary second-quarter results yesterday that trailed its own expectations, saying it didn’t adapt as rapidly as it should have to a downturn in demand, especially in Europe. Corporate customers reducing or deferring orders may also lead other software providers including Teradata Corp., Citrix Systems Inc. and VMware Inc. to reduce forecasts or miss earnings estimates, said Daud Khan, an analyst at Berenberg Bank.
“Companies are being far more cautious about spending,” Khan said in a telephone interview today. “Contracts have to be signed off by more people, which makes it difficult to get software deals done.”
Teradata, based in Dayton, Ohio, fell 10 percent to $65.01 at the close. MicroStrategy Inc. decreased 11 percent to $119.57, while QLIK Technologies Inc. fell a record 12 percent, to $17.97. QLIK has fallen 26 percent this year.
Citrix slid 7.6 percent to $77.45 and VMware fell 6.9 percent.
In Europe, Software AG and SAP AG also slumped. Software companies will probably lower full-year forecasts amid negative macro-economic data, Khan said in a research report.
Industry-wide trends were responsible for less than half of Informatica’s earnings miss, said Karl Keirstead, an analyst at BMO Capital Markets, in a research report.
“It would be a mistake to make a linear extrapolation to other software names,” said Keirstead, who rates the shares market perform.
Sales fell to about $188 million to $190 million in the period ended June 30, and earnings before certain items dropped to 27 cents to 28 cents a share, Informatica said in a statement yesterday after the markets closed. Analysts anticipated $217.4 million in revenue and 36 cents in earnings-per-share, according to predictions compiled by Bloomberg.
Informatica will report complete second-quarter results on July 26. In the second-quarter last year, the company posted revenue of $192.7 million on earnings-per-share of 33 cents, excluding items such as costs and tax benefits related to the amortization of acquired technology and intangible assets and stock compensation.