IBM Competition May Hurt Compuware

Compuware Corp. shares plunged 26% after a Morgan Stanley analyst said growth at the mainframe software maker may be stymied by competition from IBM Corp.

Analyst Joseph Farley wrote that Compuware’s revenue may be less than expected as the maker of mainframe computer software cuts prices to fend off competition from IBM, the world’s largest seller of computer services and the second-largest maker of software. IBM offers low-priced or free alternatives to many Compuware products and has improved quality so there’s little difference, Farley said.

Compuware, based in Farmington Hills, Mich., makes software that works with the mainframe computers that IBM sells. In the year ended March 31, Compuware got 81% of its $851.4 million in software and maintenance sales, or $687.3 million, from mainframe products.

Its shares fell $1.57 to $4.50 on Nasdaq after dropping to a 52-week low of $4.18.