Wit Soundview Cuts Serena Software to 'Buy'

Analyst Gary Spivak says the firm's lowered revenue estimates are sharply higher than he expected

Wit Soundview downgraded Serena Software (SRNA ) to buy from strong buy.

The software company sees $0.13-$0.14 Q2 EPS on $22.5 million-$23.5 million in revenues, but analyst Gary Spivak says he was looking for $0.23 EPS on $32.5 million in revenues. Late in the quarter, Spivak says his checks indicated a back-end loaded quarter and he thought there was a reasonable chance of a top-line miss, but he says the actual miss looks to be much greater.

Spivak cut the $132.7 million fiscal 2002 (Jan.) revenue estimate to $98.1 million, and cut the 2002 $0.98 EPS estimate to $0.66. He also trimmed the $1.19 fiscal 2003 EPS estimate to $0.78. He says the company not only is affected by the weak economic climate, but also by execution issues in North America and Germany and by much tougher negotiations from customers.

He cut the $36 price target to $18.