Lawson: Lost in the Noise

Shareholders of Lawson (Nasdaq: LWSN  ) , a developer of enterprise software applications, haven't had the most exciting time in the last few years. Shares have swung between $5 and $7, periodically juiced by buyout rumors. Unfortunately, unless the company really does get bought out, the price will probably continue to plod along.

In the third quarter, revenues increased from $87.9 million to $163.2 million. Though that seems impressive, a big part of the surge came from Lawson's recent acquisition of Intentia. Licensing revenues actually fell 10% to 16.8 million, which management admitted was a concern.

The company's overall revenue growth didn't translate into profitability, either. In the third quarter, Lawson posted a net loss of $15.8 million or $0.08 per share, down from last year's positive $4.2 million, or $0.04 per share.

As for the next quarter, Lawson expects revenues of $172 million to $180 million and earnings between break-even and a loss of $0.02 per share.

Founded in 1975, Lawson is a developer of enterprise resource planning (ERP) software, assisting its roughly 4,000 customers with inventory, HR, procurement, and other tasks. Unfortunately, its purchase of Intentia has proved hard to integrate, even as its competition has grown stronger. Oracle (Nasdaq: ORCL  ) is getting a lot of traction from jumbo-sized acquisitions such as PeopleSoft and JD Edwards, while Infor Global Solutions has been bulking up with acquisitions. Meanwhile, SAP (NYSE: SAP  ) remains a constant rival.

For the most part, the ERP category is fairly mature. While it makes sense for a company like Lawson to buy other companies, its major competitors are also doing so -- and so far, they seem to be doing a better job of it. Unless the company finds ways to improve licensing revenues, investors shouldn't expect its stock to budge from its current rut.

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Fool contributorTom Taullidoes not own shares mentioned in this article.


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