Open Text Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Open Text (NAS: OTEX) fell more than 19% in early trading and remain down more than 9% after reporting worse-than-expected fiscal fourth quarter results. A Susquehanna analyst also downgraded the stock.

So what: Revenue rose 19% to $285.4 million while adjusted profit grew 11% to $1.05 per share. Non-GAAP operating margins plunged more than 6 percentage points, causing profits to dip well below the $1.12 a share the Street was expecting.

Now what: The result prompted Susquehanna to cut its rating from "neutral" to "negative" and reduced its price target, The Wall Street Journal reported. Color me skeptical. With the Web pushing reams of new digital information our way, content management has rarely been as important as it is now. Meanwhile, the stock trades about in line with the long-term earnings growth analysts expect. Do you see an opportunity in the selloff? Will you short Open Text? Weigh in using the comments box below.

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At the time thisarticle was published Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim'sportfolio holdingsandFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.Motley Fool newsletter serviceshave recommended buying shares of and writing puts in Open Text. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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