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half the software sector warned of a weak first quarter, three companies specializing in Internet security and management said their business is going relatively well.







Internet Security Systems


each said quarterly earnings will at least match analysts' forecasts. The market's response was mixed, however.

San Diego-based Websense raised its first-quarter earnings guidance to $3.4 million to $3.8 million, or 15 cents to 17 cents a share, saying its subscription sales model has made it easier to keep expenses in line.

That's lucky, because the company also said revenue is expected to be $18.4 million to $18.5 million, down from previous guidance of $18.6 million to $18.8 million. Analysts were expecting the company to earn 14 cents a share on revenue of $18.7 million. (The miss resulted in a slew of downgrades Friday morning, and the shares lost more than 21% of their value.)

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"While we believe that fundamental demand for our products remains strong, the threat and outbreak of hostilities in the Middle East, as well as continued economic recession in many parts of the world, adversely impacted our billings performance in the quarter," said John Carrington, Palo Alto, Calif.-based Websense's chief executive officer.

Atlanta-based Internet Security Systems lowered its forecast for first-quarter earnings, but it still expects results to fall in line with analysts' consensus estimates.

Shares were up 5.1% recently to $11.35.

On a pro forma basis, the company expects to earn 12 cents to 13 cents a share; analysts expect 13 cents a share. ISS had previously forecast 13 cents to 16 cents a share. The company earned 10 cents a share in the previous year's quarter.

ISS expects to earn 10 cents or 11 cents a share, using generally accepted accounting principles.

Revenue is expected to be up from last year's $58.4 million; analysts expect $62.4 million. Previously, the company had predicted $61 million to $65 million in sales. The company will release results on April 17.

Looking to full-year 2003 results, however, the company said investors should no longer rely on its previous pro forma earnings outlook of 65 cents to 75 cents a share. Analysts were forecasting about 62 cents a share.



, of San Jose, said it expects third-quarter revenue to fall in line with its previous guidance, but also announced a 7% workforce reduction to trim costs.

Revenue is expected to be $75 million to $80 million in the quarter ended March 31. Analysts were expecting sales of $77.14 million.

The workforce reduction will cut the number of employees by about 105 to nearly 1,400 and is expected to reduce operating expenses to about $60 million to $62 million starting in the quarter ended Sept. 30. The company will take a charge to operations as part of the reorganization.

Shares were recently down a little more than 1% at $11.13.