ArcSight Looks for Q3 Sales Growth

Boosted by government business, ArcSight is expected to continue its sales momentum when it reports its Q3 results later today.
Author:
Publish date:

CUPERTINO, Calif. (

TheStreet

) -- Banking on its increasing business with the government, security software maker

ArcSight

(ARST)

is expected to continue its

sales momentum

when it reports its third-quarter results after market close.

The

rising star of I.T. security

, ArcSight has repeatedly been

cited as an attractive stock

for investors.

Cybersecurity

is big news, and ArcSight could be in for some big payouts. The

U.S. government

alone is expected to increase its IT security spending from $7.9 billion in 2009 to $11.7 billion in 2014.

The Silicon Valley firm, which competes with

Symantec

(SYMC) - Get Report

and

EMC

(EMC)

, is gearing up for a major federal push. ArcSight recently appointed Prescott Winter, the former CIO of the National Security Agency, to serve as CTO of its public sector division. ArcSight CEO Tom Reilly also spent six weeks in Washington during the fall to forge even tighter government ties.

Analysts surveyed by Thomson Reuters expect ArcSight to post revenue of $45.41 million, up from $34.4 million in the prior year's quarter. Excluding items, however, the company is expected to earn 16 cents a share, down from 21 cents a share in the same period last year.

Investors are nonetheless warming to ArcSight's story, and the company's stock rose $1.02, or 3.73%, to $28.35 on Thursday, far outpacing the Nasdaq, which crept up just 0.01%.

ArcSight's shares have climbed more than 225% in the last 12 months, and the software maker recently outlined plans to

boost its operating margin

. After achieving a 14% margin in fiscal 2009, the company is aiming for an 18% to 20% operating margin by fiscal 2012. During its analyst day in October, the company also vowed to boost its international business.

The company sells devices for monitoring security threats across networks and data centers and touts its neutrality as one of its key strengths, enabling the firm to work with a variety of tech heavyweights. These include rival EMC,

Juniper

(JNPR) - Get Report

,

McAfee

(MFE)

,

IBM

(IBM) - Get Report

and

Cisco

(CSCO) - Get Report

.

With a market cap of just over $954 million, there has been speculation

that ArcSight would make an attractive acquisition

for a tech bellwether such as

Hewlett-Packard

(HPQ) - Get Report

, although Reilly has stated its desire to keep the company independent.

-- Reported by James Rogers in New York

Follow James Rogers on

Twitter

and become a fan of

TheStreet.com

on

Facebook.