) after it reported earnings. In a note to clients, Morgan Stanley writes, "Q1 results were relatively in-line, with margins and EPS ahead of consensus while billings and revenue growth were consistent with our ests, though possibly lighter than some had expected. While fewer large deal signings might disappoint some, record 71 new customers added is encouraging in RNOW's most seasonally difficult quarter. Moreover, current software backlog is up 27% YoY on a TTM rolling basis and tracking ahead of FY11 recurring revenue guidance for 24% YoY growth. Going into a stronger seasonal quarter, numbers look conservative and likely leave room for upside as hires from the last few quarters show increased productivity. We continue to be encouraged by the momentum at RNOW, but with the stock over 30x CY12e FCF, upside is likely priced in." Shares of RNOW lost 70 cents yesterday to close at $32.95, a loss of 2.08%.