Investors beat down shares of Websense ( WBSN) after the company said fourth-quarter profit fell by 30%, and offered a disappointing outlook for the next quarter.

Fourth-quarter net income at the San Diego-based IT security company was $7.8 million in the third quarter, down nearly 30% from $11.1 million a year earlier.

Excluding stock based compensation, net income was $11.4 million, or 25 cents a share, meeting Thomson Financial analysts' estimates.

Revenue for the fourth quarter was $47.3 million, slightly below the company's previously issued revenue guidance range of $47.5 million to $48 million. Analysts polled by First Call had been expecting $47.8 million.

Shares of Websense were recently down 12.3%, or $2.75, to $21.60 in extended trading. The stock had been up about 3.5% in the last five days.

The company's lowered revenue resulted from a change in the company's revenue recognition policy from monthly to daily revenue recognition, as well as distributor marketing payments and channel rebates, said Websense.

In the fourth quarter, Websense also began distributing its software through a partnership with Ingram Micro ( IM) in North America that allowed it to expand the number of resellers and extend its reach in the Web security and Web filtering market. The partnership, however, resulted in increased start-up costs.

Websense expects to generate increased new business and become additive to revenue and earnings by mid-2007.

Net billings, reflecting approximately $578,000 in distributor marketing payments and channel rebates, were $68.4 million.

For the first quarter of 2007, Websense has forecast earnings of approximately 9 to 11 cents a share, including stock-based compensation of about $5.1 million.

Excluding stock-based compensation expenses and other charges, earnings are expected to be approximately 19 cents to 21 cents, below analysts' expectations of 25 cents a share.

Revenue is expected to be in the range of $48.5 million to $49.5 million. Analysts were expecting $49.7 million.