Rational Software Earnings Drop 40%

Rational Software Corp. reported a 40% decline in operating earnings for its fiscal first quarter to $16.2 million, or 8 cents a share.

The results were a penny better than analyst forecasts, which had been trimmed from 8 cents last week after the company warned that slowing demand in Europe and Asia would hurt revenue.

Sales rose 3.2% to $175.8 million, boosted by revenue from consulting services, and software sales fell 16%.

Shares of Cupertino, Calif.-based Rational fell 82 cents to $18.77 on Nasdaq before the announcement.