Updated from Thursday, March 4

CUPERTINO, Calif. ( TheStreet) -- Despite a 27% revenue hike, ArcSight ( ARST) ducked below analysts' profit forecast in its third-quarter results.

The security software maker brought in sales of $46.1 million, up from $36.4 million in the prior year's quarter, beating analysts' estimate of $45.41 million.

Excluding items, ArcSight earned 15 cents a share, down from 21 cents a share in the same period last year. Analysts surveyed by Thomson Reuters had forecast earnings of 16 cents a share.

In a statement, ArcSight explained that after slashing its operating expenses, the firm enjoyed an unusually high level of profitability during the third quarter of last year. "In fiscal 2010, the company returned to its more typical investment for future growth, making it difficult to compare third quarter fiscal 2010 profitability with the same period of the prior year," it said.

Tom Reilly, the ArcSight CEO, said that public sector opportunities and healthcare regulations will drive sales this year. Reilly also highlighted the energy sector as providing opportunities during a conference call to discuss the company's results.

"We believe that the advent of the smart grid will introduce new security concerns for utilities," he said. "There are thousands of sizable utilities worldwide that require security."

The earnings miss prompted a selloff in ArcSight shares after hours Thursday. The stock fell $2.54, or 8.8%, to $26.35 in extended trading.

ArcSight, which competes with Symantec ( SYMC) and EMC ( EMC), also gave bullish fourth-quarter guidance when it released its results. The Silicon Valley outfit expects revenue between $48 million and $52 million, higher than Wall Street's projection of $47.66 million.

Excluding items, ArcSight predicts earnings of 14 cents to 18 cents a share, compared to analysts' estimate of 17 cents a share.

For fiscal 2010, ArcSight forecasts revenue between $174.2 million and $178.2 million. Analysts surveyed by Thomson Reuters had forecast sales of $173.39 million.

-- Reported by James Rogers in New York

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