Light Guidance Hits Internet Security Systems

Updated from 4:24 PM EST

Fourth-quarter profit grew at Internet Security Systems(ISSX Quote), beating analysts' estimates, but the company said first-quarter earnings will come in below current projections.

Following the release, shares of ISS fell 92 cents, or 4.3%, to $20.40 on Instinet's after-hours trading exchange.

The security software maker said after the closing bell Tuesday that net income for the quarter ended Dec. 31 rose to $12.6 million, or 27 cents a share, from $9.2 million, or 19 cents a share, a year earlier.

Excluding certain items, earnings rose to $13.8 million, or 29 cents a share, beating a Thomson First Call consensus estimate of 26 cents a share.

Revenue rose to $91 million from $80.6 million. Analysts had expected the company to post revenue of $90.6 million.

For the first quarter now underway, ISS said it expects revenue of $82 million to $85 million and earnings before items of 20 cents to 22 cents a share. Both ranges are below current First Call estimates of earnings before items of 23 cents a share and revenue of $86.6 million.

CEO Tom Noonan said the lower guidance was based on the company's strategy of investing in research and development, and internal investments. He said the company raised its guidance for annual revenue.

He added that first-quarter guidance also is affected by the impact of loss due to the exchange rate of the euro and yen. "That impact on Q1 alone is about $4 million," Noonan said.

For the full year, the company projects earnings before items of $1.01 to $1.05 a share on revenue of $366 million to $367 million, bracketing analysts' estimates of EPS of $1.02 and revenue of $368.9 million.