Blue Coat Systems

(BCSI)

lost nearly a third of its value Friday after the company's second-straight quarterly earnings disappointment.

Shares in the Sunnyvale, Calif., maker of Web security gear dropped 31% following Thursday evening's first-quarter profit warning. Blue Coat said it expects to make 12 to 14 cents a share on revenue of $21 million for the period. Excluding certain costs, earnings will be 16 to 18 cents a share.

Those figures are well short of the Thomson First Call analyst consensus estimate, which called for operating earnings of 21 cents a share on revenue of $22.8 million. Blue Coat lost 9 cents a share on an operating basis last year.

"These preliminary results were primarily due to lower-than-expected growth in North American sales, particularly in our federal business which has been declining on an absolute basis over the past several quarters," said CEO Brian NeSmith. "In addition, as we target larger deal opportunities, customers have more options to evaluate, which lengthens the sales cycle. We did experience strong growth in our European business, and overall, we remain optimistic and confident about our long-term business opportunity."

The company also said an internal audit indicates Blue Coat will be able to use its $250 million in so-called tax-loss carryforwards over the next 15 to 20 years. The company said its analysis eliminates any concern "that we might have been significantly limited by Internal Revenue Code section 382."

Nonetheless, Blue Coat stock took a shellacking Friday not unlike the May 28 selloff. That plunge followed on the heels of Blue Coat's

weaker-than-expected fourth-quarter numbers. The late May selloff took the stock to around $30 from nearly $40. On Friday, Blue Coat shares retreated $5.18 to $11.31.