Piper Jaffray Downgrades Borland Software

Analyst David Rudow thinks the software company is seeing a weaker-than-expected spending environment and poor closure rates in Europe

Piper Jaffray downgrades Borland Software (BORL ) to underperform.

Analyst David Rudow says the company announced a shortfall for the second quarter and named Scott Arnold interim CEO because CEO Dale Fuller stepped down.

He notes the company now sees a 1-cent to 2-cent second-quarter pro-forma loss on $65 million to $67 million total revenues, citing weaker-than-expected spending environment, poor closure rates in Europe, and other factors. He thinks the company will need to increase research and development spending over his forecast period.

Rudow cuts his 1 cent second-quarter earnings per share estimate on $69 million revenue to a penny loss on $65.9 million revenue, 15 cents 2005 earnings per share on $292.5 million in revenue to a penny earnings per share on $269 million in revenue, and 18 cents 2006 earnings per share on $301.5 million in revenue to 3 cents earnings per share on $261.5 million in revenue.

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