Updated from 4:51 p.m. EDT VeriSign ( VRSN) posted a second-quarter profit in line with the Street's estimates on Thursday, while sales came in higher than what analysts anticipated. But light guidance, provided on a subsequent conference call, prompted the stock to dip 2.9%, losing 59 cents to $20 in after-hours trading on Instinet. Net income for the second quarter was $349.9 million, or $1.42 a share, up from $41.3 million, or 15 cents a share in the same quarter last year. The large jump on the bottom line included $327 million in tax benefits and $13.2 million in non-cash stock-based compensation charges. Excluding certain items, VeriSign made $58.6 million, or 24 cents a share, falling from $73.6 million, or 27 cents a share in the second quarter 2005. On that basis, VeriSign met analysts' projections on the button. Revenue was down in comparison with the corresponding quarter in 2005. The security services firm posted $391.9 million for the June quarter 2006. At the same time last year, sales totaled $430.4 million. Still, the company surpassed consensus predictions for $386.6 million in sales. VeriSign said third-quarter earnings per share would be 24 cents, a penny off the consensus estimate, and revenue should be in the $400 million range. For the third quarter, the average estimate from Thomson First Call was 25 cents a share on sales of $403.6 million. The company anticipates gross margins for the September quarter will be flat, in the 63% range. "We are pleased with our execution in the first half of 2006," Stratton Sclavos, VeriSign CEO said in a statement. "As our results indicate, demand for our intelligent infrastructure services continues to grow as our customers accelerate their migration to network-based interactions with their business partners, employees and customers."
VeriSign also reiterated that its board is conducting an investigation into the company's granting of stock options with the assistance of outside lawyers. Once the review is complete, the facts "may require us to change our accounting treatment of stock options granted in prior periods which may have a material adverse effect on our results."