ArcSight Beats, Expands Overseas

Story updated with ArcSight conference call comments.

CUPERTINO, California (TheStreet) -- ArcSight(ARST), which has been touted as M&A bait, is continuing its momentum, blowing past analysts' first-quarter estimates.

The security software maker posted its results after market close, reporting sales of $48.1 million, up from $34.6 million in the prior year's quarter, and well above analysts' estimate of $45.53 million.

Excluding items, ArcSight earned 18 cents a share, up from 9 cents a share in the same period last year. Analysts surveyed by Thomson Reuters had predicted earnings of 13 cents a share.

ArcSight also gave bullish second-quarter outlook, predicting revenue between $55 million and $57 million, compared to analysts' forecast of $52.61 million. Excluding items, the security firm expects to earn between 19 cents a share and 20 cents a share, higher than Wall Street's estimate of 17 cents a share.

In a statement, ArcSight CEO Tom Reilly explained that the firm is experiencing strong growth in its government and commercial businesses and is now expanding internationally.

ArcSight's statement made no mention of M&A, despite the acquisition rumors that continue to swirl around the company.

Last week the Wall Street Journal reported that ArcSight had put itself on the auction block. Citing people familiar with the matter, the Journal said that potential buyers, including Oracle(ORCL) and Hewlett-Packard(HPQ) could pay up to $1.5 billion for the company. EMC(EMC), IBM(IBM) and CA(CA) are also possible purchasers, it added.

ArcSight CEO Tom Reilly, however, refused to comment on possible M&A when quizzed by an analyst during a conference call after market close on Thursday.

Reilly was much more forthcoming on the company's overseas expansion during his conference call presentation. "We're aggressively expanding our sales efforts with international governments," he said, and added that new commercial opportunities are also opening up. "We're working with our channel partners to secure the operations of financial institutions, telecom companies and utilities."

One of TheStreet's top security stocks for 2010, ArcSight makes security management and compliance software, and was recently cited as one of the sector's most attractive acquisition targets. TheStreet's 'Breakout Stocks' portfolio has described ArcSight as "one of the most compelling secular growth stories in the market."

ArcSight's stock surged in the aftermath of the Wall Street Journal story, but was down 44 cents, or 1.16%, to $37.40 in extended trading on Thursday.

--Written by James Rogers in New York.

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