A host of troubles, including delayed SEC filings, had kept MSC.Software (NASDAQ:MSCS) trading on the Pink Sheets. That all changed in August, when the enterprise software maker was able to meet the requirements to list on the Nasdaq. But life back in the big time got off to a rocky start when the company announced that the third quarter would be weak. That news sent the stock price plunging 13% and served as a reminder that despite much progress, MSC still needs time for its turnaround to work.

In the third quarter, revenues declined from $75.6 million to $58.4 million. Unfortunately, there was a big falloff in software license revenue, which fell from $36.8 million to $22.7 million. This is critical, since this type of revenue leads to ongoing maintenance and services fees.

The company also posted a net loss in the third quarter of $1.7 million, or $0.04 per share, which compares with a net profit of $6.3 million, or $0.20 per share, in the same period a year ago. The company does still have $114 million in the bank.

No doubt, MSC has a long history. The company got its start in 1963 (the founders invested an initial $18,000) and was able to land a major contract with NASA.

As of now, MSC has a comprehensive set of solutions to help companies with simulations (for sophisticated products, such as planes). The software handles complex things like modeling fluid dynamics, dynamic motion analysis, and so on, and it helps improve product designs, quality, and reliability. Some of MSC's marquee customers include Boeing (NYSE:BA), Ford (NYSE:F), and Deere & Co (NYSE:DE).

However, critical to the success of MSC is its recent alliance with IBM (NYSE:IBM). Basically, IBM wants a piece of the computer-aided engineering (CAE) market, which is growing by about 11% per year. (The market stood at about $2.25 billion in 2005.)

Thus, IBM is promoting the MSC product line through its massive distribution network, which includes major clients in the auto, aerospace, and construction sectors. What's more, IBM plans to leverage its global services organization, which is critical for the implementation of sophisticated software solutions.

But as MSC has learned, the IBM accounts often involve a long sales cycle. In fact, on the conference call, MSC CEO Bill Weyand made it clear that the sales cycle can easily last between six and 12 months.

In other words, it will take time for IBM to have a significant impact on MSC -- perhaps until the middle of 2007. But, after much turmoil over the years, it does look as though the company finally has a viable strategy.

For further Foolishness:

Check out any of our newsletters with a 30-day free trial.

Fool contributor Tom Taulli does not own shares of companies mentioned in this article. He is currently ranked 67th out of 12,834 in Motley Fool CAPS, the Fool's new stock-rating community that you can join for free.