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Interactive Intelligence shares sink after quarterly report

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Interactive Intelligence Group Inc. shares fell 25 percent in trading Tuesday morning, erasing more than $150 million in market value for the Indianapolis-based software maker.

The tumble followed a third-quarter earnings report that disappointed investors. Earnings at Interactive Intelligence fell 6 percent from the same quarter of 2010, well below analyst expectations, despite a 25-percent increase in revenue, the company announced late Monday.

Shares fell by more than $8, to $25.19 each, on Tuesday, flirting with a 52-week low.

Company executives said on a conference call with analysts Monday that some clients put orders on hold as the economic outlook darkened in recent weeks.  

“I think things got a bit scary for a while from an economic perspective, and we’re working on pretty big contracts here,” said Paul Weber, the company’s vice president of sales for North America. “It’s certainly nothing from a competitive perspective—we’ve never been positioned better than we are right now.”

Profit for the quarter ended Sept. 30 was $3.3 million, or 16 cents a share, compared to $3.5 million, or 19 cents per share, a year ago.

Revenue rose from $41.8 million to $52.1 million. But operating expenses jumped 29.5 percent, to $30.1 million, as the company experienced higher-than-expected growth in its cloud-based product line.

Orders for the company’s cloud-based software, which is accessed via the Internet rather than hosted at the customer’s premises, more than doubled in the third quarter, to 31 percent of total orders.

Cloud “is now the fastest growing part of our business,’’ company co-founder and CEO Donald Brown told analysts during the conference call.

Company executives played down quarterly earnings that came in well below analysts’ consensus prediction of 31 cents a share, saying Interactive sees its growth in cloud computing as a way to pass larger, traditional competitors amid the market shift.

Total company orders rose 14 percent, including 54 new customers.

Interactive Intelligence also recorded accounting adjustments related to three previous acquisitions, as well as expenses for stock options of $1.4 million, or 7 cents a share.

On the upside, the company scored the largest deal in its history, a $10 million cloud contract order.

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  1. Apologies for the wall of text. I promise I had this nicely formatted in paragraphs in Notepad before pasting here.

  2. I believe that is incorrect Sir, the people's tax-dollars are NOT paying for the companies investment. Without the tax-break the company would be paying an ADDITIONAL $11.1 million in taxes ON TOP of their $22.5 Million investment (Building + IT), for a total of $33.6M or a 50% tax rate. Also, the article does not specify what the total taxes were BEFORE the break. Usually such a corporate tax-break is a 'discount' not a 100% wavier of tax obligations. For sake of example lets say the original taxes added up to $30M over 10 years. $12.5M, New Building $10.0M, IT infrastructure $30.0M, Total Taxes (Example Number) == $52.5M ININ's Cost - $1.8M /10 years, Tax Break (Building) - $0.75M /10 years, Tax Break (IT Infrastructure) - $8.6M /2 years, Tax Breaks (against Hiring Commitment: 430 new jobs /2 years) == 11.5M Possible tax breaks. ININ TOTAL COST: $41M Even if you assume a 100% break, change the '30.0M' to '11.5M' and you can see the Company will be paying a minimum of $22.5, out-of-pocket for their capital-investment - NOT the tax-payers. Also note, much of this money is being spent locally in Indiana and it is creating 430 jobs in your city. I admit I'm a little unclear which tax-breaks are allocated to exactly which expenses. Clearly this is all oversimplified but I think we have both made our points! :) Sorry for the long post.

  3. Clearly, there is a lack of a basic understanding of economics. It is not up to the company to decide what to pay its workers. If companies were able to decide how much to pay their workers then why wouldn't they pay everyone minimum wage? Why choose to pay $10 or $14 when they could pay $7? The answer is that companies DO NOT decide how much to pay workers. It is the market that dictates what a worker is worth and how much they should get paid. If Lowe's chooses to pay a call center worker $7 an hour it will not be able to hire anyone for the job, because all those people will work for someone else paying the market rate of $10-$14 an hour. This forces Lowes to pay its workers that much. Not because it wants to pay them that much out of the goodness of their heart, but because it has to pay them that much in order to stay competitive and attract good workers.

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