NetSuite rises as 3Q results, forecast impress

SAN FRANCISCO (AP) ? Shares of NetSuite Inc. climbed Friday after the provider of Web-based business management software reported better-than-expected third-quarter results and fourth-quarter revenue outlook. The company also predicted 2012 revenue ahead of Wall Street estimates.

THE SPARK: Late Thursday, NetSuite said its loss for the July-September quarter totaled 10 cents per share; excluding one-time items, the company earned 5 cents per share, which was a penny better than what analysts polled by FactSet expected.

Revenue rose 23 percent year over year to $61 million; analysts were expecting $60 million.

In a conference call with analysts to discuss its results, NetSuite predicted adjusted earnings of 4 cents per share on $63 million to $63.5 million in revenue for the current quarter.

At the time, analysts expected 5 cents per share on $62.9 million in revenue.

The company also predicted that in 2012 it will grow faster than it did this year and said it’s looking for revenue of $290 million to $300 million. Analysts were predicting $279 million in 2012 revenue as of late Thursday.

THE ANALYSIS: In a client note, Kaufman Bros. analyst Sachin Jain called the quarter “impressive” and said NetSuite’s revenue outlook for next year looks “solid.”

“Overall, we see strong business momentum into 2012. Business fundamentals continue to be solid, led by strong billings growth, rising (average selling prices), and blue-chip clients,” he said. “NetSuite has still not seen the impact of economic slowdown, and achieved its highest customer retention rates in 3Q11.”

Jain has a “Buy” rating on Netsuite’s shares with a $46 price target.

SHARE ACTION: NetSuite rose $2.66, or 6.7 percent, to $42.38 in afternoon trading.