Lawson quarterly earnings soar as buyout bid hangs in balance

Lawson Software Inc. reported strong third-quarter results Thursday, marking its 10th consecutive quarter of year-over-year increases in its operating margin.

Profit skyrocketed at the St. Paul-based software firm, jumping to $21.4 million from $1.7 million a year ago. Revenue in the quarter totaled $196 million, a $13 million increase over the same quarter in 2010.

The company canceled its scheduled conference call with analysts in light of an unsolicited offer it received March 11 to be acquired by Infor Global Solutions, which is owned by Golden Gate Capital, for $11.25 a share.

The stock closed Thursday at $12.10 up about 1 percent for the day. It's held relatively steady in that range since the buyout offer, a sign Wall Street thinks a higher bidder may emerge.

Lawson management summed up its earnings performance this way in prepared remarks: "By nearly every measure, our third quarter was strong."

Lawson reported operating income reached $22.3 million, up $10.7 million for the same period last year. The quarter produced earnings per share of $0.13, up from $0.01 a year prior.

Lawson said it signed 313 deals in the quarter, six of which exceeded $1 million.

Lawson has two primary segments for its software products. One focuses primarily on service industries, including health care. The other focuses on industries that manufacture goods, distribute them or maintain them. It also provides some products tailored to specific industries.

Service industry software and subscriptions increased 37 percent for the quarter, driven partly by the acquisitions of Healthvision, which serves the health care industry, and Enwisen, which serves the human resources industry. Health care was the most lucrative segment for the company, providing five of its six $1 million deals, four of which were new customers, the company said. Enwisen contributed $3.2 million to total revenue in the quarter.

Lawson said sales to governmental agencies in the quarter were "muted given the state and local budget climates."

"Total gross margin of 63 percent in Q3 marked a record high for Lawson," the company said. "Gross margin was up 340 basis points from the same quarter last year."

Lawson reported $312.5 million in cash and investments, with net cash of nearly $79.8 million as of Feb. 28.

"Our cash and investments balance is up by $75.1 million over last year, even after spending $70 million on the acquisition of Enwisen in December," the company noted.

Billionaire investor Carl Icahn, who owns nearly 11 percent of Lawson, has said he supports a possible Lawson sale. Lawson has about 3,800 employees worldwide, including more than 700 in St. Paul.

Dan Browning • 612-673-4493