Industrial-software king Autodesk (Nasdaq: ADSK) had one of the ugliest quarters of any stock, missing estimates by a wide swing and taking the ax to full-year guidance. The market rained fury, driving the shares down by 21% after the results came out. Its market cap was knocked down, dropping from $8.2 billion to less than $6.7 billion. Since much of the company's business is tied to the industrial and architectural sectors, does this indicate trouble in those sectors and, hence, the broader economy?

Shortfall city
Autodesk's results were a crushing disappointment by any standard. Revenue fell about $25 million short of analyst expectations, coming in at $569 million. The bottom line also failed to meet expectations; the market anticipated $0.49 per share of non-GAAP EPS and got $0.48. Compounding this was full-year guidance, which is now $550 million to $570 million in revenue, in contrast to analysts' now-dashed expectations of more than $600 million.

The chopped guidance is a particular worry for those who see Autodesk's performance as a bellwether for the overall economy. That's because the company is now and probably forevermore tightly dependent on the building and industrial sectors; it began life as a purveyor of computer-aided design (CAD) software, an indispensible tool for the architecture business. Ever since, it's consistently been No. 1 in that niche with its flagship software suite, AutoCAD, still the de facto standard for the industry.

From AutoCAD, Autodesk has branched out but stayed close to its roots. It sells numerous software solutions, nearly all of which have something to do with building, industrial, or product design. It has a decent side business in special-effects software used in TV, movies, and video games, but this is a very competitive business contested by determined rivals such as the sprawling Adobe Systems (Nasdaq: ADBE).

Autodesk rules the architecture and design field, but compared with Adobe it's a niche player in entertainment. The former took in $49 million in revenue from its selection of media and entertainment offerings this past quarter, while Adobe and its big, something-for-every-taste digital-media offerings collectively roped in $818 million.

Only around 9% of Autodesk's revenue comes in this segment; the rest is essentially derived from construction and industry (thanks to the heavy slant toward architectural software like AutoCAD and complimentary products). The theory is, both construction and industrials are doing well if they're buying stuff from Autodesk. If the software purveyor's results are sluggish and expectations for future periods are cut, this is influenced by similar weakness in its customer base.

Solid foundation
Except that the customer base seems to be holding up pretty well. One particular metric that stands out sharply is sales of newly built U.S. homes, which rose by a dramatic 26% year over year in July to hit a total of 372,000. Demand for living space seems to be growing as well, with prices of existing homes rising 1.8% quarter-on-quarter in Q2 this year.

More than a few big-time construction companies are benefiting. Even builders of lower-end residences such as D.R. Horton (NYSE: DHI) are seeing a lift from these recent trends. This company's most recent quarter saw a 25% jump in its orders, while net grew nearly threefold year-over-year -- and that's with a big tax benefit stripped out of the equation. Horton's one-year stock-price graph shows a more or less steady climb from around the $10 range to the current level of just over $19, close to its 52-week high.

A similar stock price shape can be traced for Lennar (NYSE: LEN), a slightly more diversified company that also offers financial and other real estate services. Not to be outdone by Horton, Lennar reached its year-high earlier this month. This is on the back of a mighty Q2; revenue grew 21% from the same period the previous year, and new orders popped by 40%.

Bringing good things to life
It's not only specialty operators that are considered bellwethers. Some big-name, richly capitalized veteran stocks also enjoy that distinction. One company that many think mirrors the health of the economy is the enormously diversified light bulbs-to-steam turbines conglomerate General Electric (NYSE: GE).

In terms of results, GE hasn't boasted the impressive growth numbers of a D.R. Horton or a Lennar. Rather, it's chugged along steadily over the past few quarters and posted top and bottom lines that didn't grow or dip all that much. But optimism is in the air; the average analyst EPS estimate for the company's upcoming quarter is $0.36 per share, or a 24% improvement on the most recent quarterly number. The reporting period after that is expected to be another sunny one, with EPS anticipated to come in at $0.47.

So bears shouldn't necessarily take Autodesk's stumble as a sign that the economic sky is falling. Besides, according to the company, its faltering results were due in no small part to a reorganization of its sales staff along product, rather than geographical, lines. Whether this is the company's deepest problem is open to debate; regardless, we'd do well not to assume those poor results are the sign of something darker advancing on our economy.

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