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What: Shares of systems management software provider Quest Software
So what: The initial reaction to Quest's fourth-quarter results was particularly negative as investors were disappointed by non-GAAP earnings per share of $0.40 which were flat with the prior year and below the $0.45 that Wall Street analysts were looking for. The underwhelming earnings number was driven by lower margins as revenue grew 11% and topped expectations.
Now what: Management glazed over the less-than-hoped-for fourth-quarter profits, instead focusing its comments in the earnings release to the quarter's revenue growth and the stronger bottom-line performance for the full year. Investors seem to have come around to management's optimism as the stock significantly pared its losses through the day. Though it's rarely a good idea to read too much into a single quarter's performance, investors will want to keep an eye on margins going forward to make sure that the fourth quarter isn't the beginning of a trend.
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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.