We are maintaining our full year (March) earnings estimate at $1.10 a share. The trend towards annual licenses may continue, in which case a lower number probably will be reported. Those deals would lay the groundwork for greater recurring income in the future, though. Rising energy prices promise to bolster demand over the intermediate term. Tar sands, shale oil, shale gas, deep offshore, heavy oil, and other complex formations are where the action is when it comes to new discoveries. As those fields get the go ahead demand for Computer Modelling's software is sure to follow. The pipeline fiasco now afflicting the U.S. oil market may exert a slight restraint on activity. But the U.S. has become one of the company's smaller markets, so the net impact shouldn't amount to too much. Reported results also will be effected negatively if the U.S. Dollar declines materially, since two thirds of revenue is denominated in that currency while most costs are paid in Canadian Dollars.
Financial results could accelerate sharply after the new software line is introduced. The technology was field tested last year. The software currently is being enhanced to run faster with better user interfaces. Commercial launch is expected later this calendar year. With a major new product in the wings, demand still growing rapidly for the company's core product, and no direct competition in sight, these shares continue to hold exceptional appreciation potential. Meantime, the shares are yielding a 3%-4% cash dividend.
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