Rational Q3 net rev slips 5%

CUPERTINO: For its fiscal third quarter of 2003 ended Dec. 31, Rational has reported a net loss of to $3.6 million, or 2 cents a share from a net loss of $17.9 million, or 9 cents a share, a year earlier. It said revenue slipped nearly 5 percent to $161.9 million from $170.2 million in the prior period, as customers continued to keep a tight grip on their technology purse strings.

Speaking on a conference call with analysts, executives said they would not issue financial guidance for the March quarter, or full year 2003, because of its pending acquisition by IBM acquisition. Excluding items and charges, Rational said it posted a profit of 6 cents a share, compared with 7 cents a year ago.

Analysts on average had expected Rational to earn 5 cents a share on that basis, according to earnings research firm Thomson First Call. The stock of Rational edged up slightly to $10.42 in light after-hours trading, from a Nasdaq close of $10.37, according to Instinet. The stock, which traded as high as $69 in Sept. 2000, is off its 52-week high of $24.91.

On Dec. 6, IBM, of Armonk, New York, said it would pay $10.50 cash per share for Cupertino, California-based Rational in a move to help it better compete against Microsoft Corp. in the hot market for web-based software and services. For IBM, the world's largest maker of computers and No. 1 provider of technical services, the deal is its biggest software acquisition since the $3.5 billion purchase of Lotus Notes Corp. in 1995. It is also IBM's latest move away from the computer hardware business that was its trademark for decades.

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