Another Model Quarter for Autodesk

Autodesk (Nasdaq: ADSK  ) , which develops design software, continues to impress the Street -- its stock price surged nearly 10% on its earnings release last week. The company continues to further its leadership in its category and is also benefiting nicely from some major trends. So it is no surprise that management believes the growth will extend throughout 2007.

In the third quarter, revenues increased 21% to $457 million. However, the company did not report its net income because of a voluntary investigation of its prior stock options grants. There's no indication of when this might be completed.

Autodesk has a comprehensive suite of design software, covering diverse industries like manufacturing, infrastructure, and media. With the software, customers can prototype, manage, and share designs of a myriad of things -- for example, schools, machines, and automated movies.

The company is in the midst of a major technology transition, moving from 2-D to 3-D design. With 3-D design, customers can engage in better modeling, since it is possible to do "what-if" analysis with new designs. It is this sophisticated technology that helps Autodesk differentiate itself from tough competitors such as Parametric Technology (Nasdaq: PMTC  ) , Avid Technology (Nasdaq: AVID  ) , and Adobe Systems (Nasdaq: ADBE  ) .

Another catalyst is growth from emerging economies, such as China and India. These countries are undergoing massive infrastructure investments, and Autodesk software should be a big help.

In terms of guidance, management expects revenues of $490 million to $500 million in the fourth quarter. And for the next year, revenues are forecast to range from $2.075 billion to $2.125 billion.

So, in light of all the good news, is this stock really a slam dunk? Not necessarily. After all, the company develops software for economically sensitive industries, such as construction and manufacturing. While there has been some weakness in the U.S. economy lately, it has not adversely impacted Autodesk's results. But if things continue to worsen, it seems that the company will also slow down.

There is still much risk to this stock. But for the time being, the company certainly has a lot of momentum in its business.

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Fool contributor Tom Taulli does not own shares mentioned in this article.He is currently ranked 41 out of 13,432 in CAPS. The Fool has a disclosure policy.


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