Websense Beats Forecasts

IT security company Websense(WBSN Quote) beat analyst expectations for the third quarter but said it is dropping quarterly guidance for the next fiscal year because of accounting problems stemming from a key acquisition.

Websense, which offers web filtering and management products that prevent data leaks, said third-quarter net income was $6.4 million, or 14 cents a share, compared to $8.3 million, or 18 cents a share in the year-ago quarter.

Excluding acquisition-related and other charges, net income fell 3% to $10.9 million, or 24 cents a share, from $11.3 million, or 25 cents a share, a year ago. Analysts polled by Thomson Financial were expecting earnings of 22 cents a share.

The decline in net income stemmed from charges related to its acquisition of data leak prevention company Port Authority in January and a shift in its distribution model.

Revenue rose 10% to $50.4 million, compared to $45.7 million a year ago. Analysts were expecting revenue of $50.5 million. Third-quarter revenue is net of approximately $950,000 in marketing payments and rebates to channel partners.

Websense said it will not offer quarterly guidance beginning with fiscal year 2008 and will update its annual guidance on a quarterly basis.

"Quarterly variations are difficult to predict and not the best way to manage the business," Dudley Mendenhall, chief financial officer of Websense told analysts on a conference call.