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Telecom Italia:
Telecom Italia, Italy`s top telecommunications firm in wireless and fixed- line operations, purchased additional MicroStrategy software and services to expand their business intelligence applications. The company uses MicroStrategy software to analyze the characteristics and needs of over one million portal visitors to its four Web sites. Using MicroStrategy products, Telecom Italia can improve its customer service and increases customer loyalty.
More Recognition of MicroStrategy`s Technological Leadership
In January 2002, MicroStrategy won Reader`s Choice awards in Intelligent Enterprise, a leading IT publication, for its software`s advanced analysis and data mining capabilities and for customer relationship management (CRM) analysis. MicroStrategy won these awards in competition with Business Objects, Oracle, Cognos, Brio, Actuate, and SAS Institute.
Also in January of 2002, MicroStrategy 7 was found to be the most comprehensive analytical tool reviewed by the CRN Test Center, in an evaluation of analytical tools including Microsoft`s Data Analyzer 3.5 and ProClarity`s Analytic Platform 4.0. MicroStrategy`s interactive, pure-HTML Web client and extensive library of analytical functions were among the top features the review highlighted, and the MicroStrategy 7 platform was deemed the best solution for the Web.
Finance Commentary
Diluted pro forma earnings per share was $0.02 and diluted GAAP loss per share was $(0.08) in the quarter. The Q1 2002 diluted GAAP loss per share of $(0.08) was primarily the result of an adjustment to the numerator of the earnings per share calculation of $10.4 million in losses from the assumed conversion of MicroStrategy`s Series A, B, and C preferred shares, in addition to the incremental shares added to the denominator. This assumed loss on conversion is strictly a non-cash item and is the theoretical difference between the fair market value of the common shares to be issued and the current carrying value of the preferred securities. Even though the Series A, B and C preferred shares are unconverted as of the end of Q1 2002, the assumed loss on conversion must be considered for the GAAP earnings per share computation. A reconciliation of the adjustments to the numerator and denominator on the GAAP earnings per share calculation and additional disclosure is included in the attached financial exhibits. For the first quarter ending March 31, 2002, the company reported positive pro forma EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) of $6.4 million making this the fourth consecutive quarter of positive pro forma EBITDA results. A reconciliation of net income attributable to common stockholders to EBITDA is provided in the attached financial exhibits. In connection with completing the development of MicroStrategy 7i, the Company capitalized $2.4 million in software development costs during Q1 2002 and expects to capitalize additional costs through the general availability release in late April 2002. The Company expects the quarterly capitalization of software development costs to be substantially less for the duration of 2002 as compared to Q1 2002. In April of 2002, the Company amended its credit facility with Foothill Capital, a subsidiary of Wells Fargo, to eliminate the covenant requiring that the company raise an additional $10 million in either equity financing or through asset sales by June 30, 2002.
Separately, MicroStrategy Chairman and CEO, Michael Saylor, has informed the company that, effective April 29, 2002, he is terminating his 10b5-1 selling program announced in February 2001. "I think the company is well positioned to grow and prosper during the coming years," said Mr. Saylor. "We have the opportunity to become a truly great enterprise software company. Given the current uncertain state of the markets, I believe that it is important that I reaffirm my commitment to both the company as well as our other loyal shareholders. I currently hold approximately 36 million shares of MicroStrategy and believe that they are my best investment. I am terminating my 10b5-1 program because I believe the needs of our employees, customers, and investors should come ahead of my own routine diversification plan in these difficult times."
Outlook and Financial Guidance Information
The following statements are subject to risks and uncertainties described at the end of this press release. Management guidance for 2002 supersedes any previously announced guidance as to the Company`s expectations for financial results for 2002.
Management offers the following guidance for the consolidated continuing operations of MicroStrategy for the quarter ending June 30, 2002:
Revenue is expected to be in the range of approximately $33 to $37 million. Pro forma results of operations, excluding special items, are expected to range from a loss of $3 million to breakeven. Pro forma earnings per share, excluding special items, and assuming a basic weighted average share count is expected to range from a loss of approximately $(0.03) per share to $0.00 per share. Average share count in the quarter using the basic weighted average share count method is expected to be 96-97 million. This assumes conversion of the Series A preferred stock and no interim conversion of the Series B, C, or D preferred stock.
Management offers the following guidance for the consolidated continuing operations of MicroStrategy for the full year ending December 31, 2002:
Consolidated revenue is expected to be in the range of approximately $145 to $160 million. Consolidated pro forma earnings per share, excluding special items, is expected to be in the range of approximately $0.02 to $0.06 per share.
MicroStrategy will hold a conference call chaired by Michael Saylor today at 5:30 p.m. (EDT) Domestically, dial 877-597-9704 and mention Michael Saylor as the chairperson prior to 5:30 p.m. EDT, or for 48-hour playback access, dial 800-642-1687 and enter the conference ID 3797796. Internationally, dial 706-634-6550 and mention Michael Saylor as the chairperson prior to 5:30 p.m. EDT, or for 48-hour playback, dial 706-645-9291 and enter the conference ID 3797796. For a live Webcast or replay of the call, visit -- http://www.microstrategy.com/investor or http://www.streetevents.com/ for StreetEvents subscribers.
About MicroStrategy Incorporated
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