Nails on a Chalkboard From Blackboard

When Blackboard (Nasdaq: BBBB  ) reported earnings this week, it might as well have dragged its nails across a chalkboard. The market didn't like the sound of it one bit.

The actual results were not too shabby: Second-quarter sales jumped 17% year over year to $108 million, and the year-ago quarter's $0.13 GAAP loss per share was transformed into a $0.13 net profit per share.

Blackboard is also savvy to new ways of doing business, having introduced mobile versions of its Blackboard Learn product for a slew of platforms. Whether you (or your kids) are rocking an Apple (Nasdaq: AAPL  ) iPhone or iPad, an Android handset, or a Research In Motion (Nasdaq: RIMM  ) BlackBerry, there's a Blackboard application for that. This is a good sign, because it shows that Blackboard is keeping its fingers on the pulse of its markets. Bright-eyed and bushy-tailed is how I like my management teams.

The wizard of technology for educational management also opened a new $175 million credit line for general corporate expenses. Since Blackboard already has $167 million of cash equivalents on hand and is not burning cash, I have to wonder if the company isn't getting ready for some grand, expensive gesture. Main rival Moodle would be too expensive and might raise eyebrows in the government's antitrust offices, but privately held Desire2Learn or Pearson (NYSE: PSO  ) division eCollege could be tasty tack-on targets.

That's all grand but Blackboard's stock fell because of a cloudy outlook. Management expects the next quarter to deliver GAAP earnings in the $0.12 to $0.19 range per share, or up to $0.47 per share on a non-GAAP basis. That's below the Wall Street forecast. This is another example of why I think guidance is a sucker's game -- disappoint the Street with conservative numbers or set yourself up for disappointment with bolder target, and you lose either way.

Are you worried about the low guidance or excited about Blackboard's many strengths? Make your mark in our CAPS system, where 94% of 1,375 members see Blackboard beating the market.