Saturday, June 14, 2014

NICE Systems Earnings Analysis

NICE Systems  delivered a set of first-quarter results that were anything but nice, and the stock fell nearly 10% on the day of the results. The company specializes in offering hardware and software that captures and analyzes customer interactions across a number of platforms. For these reasons, it's often seen as a big-data play. Fools may be asking what the disappointing results mean for NICE, for rivals like Verint Systems  , and for companies looking to expand its data analytics offerings, like IBM ?


NICE Systems soft first quarter
A quick roundup of the results reveals that revenue and EPS came in below the bottom end of its guidance. In addition, its full-year guidance was reduced.

  • First-quarter revenue of $228.6 million vs. guidance of $230 million-$240 million
  • First-quarter non-GAAP EPS of $0.57 vs. guidance of $0.58-$0.63
  • Full-year revenue guidance reduced to $995 million-$1.025 billion from $1.01 billion-$1.035 billion
  • Full-year non-GAAP EPS guidance reduced to $2.68-$2.80 from $2.73-$2.85
  • Second-quarter guidance of $230 million-$240 million in revenue, and non-GAAP EP of $0.55-$0.62

It was anything but a nice quarter, and the report doesn't auger well for Verint or IBM. It matters to IBM because the company is a partner of NICE in offering big-data analytics solutions, and, as Fools already know, IBM is depending on growth in areas like business analytics to counter slow growth elsewhere in its product portfolio. In fact, earlier this year, IBM announced a $1 billion investment in creating a business unit for Watson, its supercomputer system that delivers data analytics via the cloud.  


More of a NICE Systems issue than an industry problem
While it's never good news to see a leading company in an industry reducing full-year guidance, there are three key reasons that suggest this is more of a company-specific issue.