Revenue Vexes VeriSign

The Internet security company's profit and sales slump from the year-ago quarter.
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Updated from 5:11 p.m. EDT

VeriSign

(VRSN) - Get Report

saw its first-quarter profit plummet, but the company returned both top- and bottom-line numbers that beat the Street's expectations.

However, the company guided lower than expected for the second, or current, quarter.

"This has been the pattern that has been problematic," American Technology Research analyst Albert Lin says. "The quarter is fine, but the outlook is always a little disappointing."

VeriSign dipped $1.19, or 4.7%, to $24.20 in recent after-hours trading.

Reporting after the closing bell on Thursday, the Internet security company earned $15.7 million, or 6 cents a share, down from the $49.2 million, or 19 cents a share, it earned during the same quarter last year.

Excluding certain items and assuming a 30% tax rate, the company earned $83.6 million, or 24 cents a share, dropping from the $94.6 million, or 25 cents a share, in the first quarter of 2005.

On that basis, VeriSign exceeded the Thomson First Call estimate of 22 cents a share.

At $373.6 million, revenue was also down from the same quarter last year, from $387.3 million, but edged past the First Call number of $373 million.

In a conference call with analysts, CFO Dana Evan said the company would collect between $380 million and $385 million for the second quarter.

EPS should range from 23 cents to 24 cents. That guidance is lower than the consensus for revenue from First Call analysts, which forecast a profit of 24 cents on sales of $387.5 million.

Lin, who has a sell rating on VeriSign, calls the company "complicated" and says "they never seem to give enough detail about each of the pieces of their businesses. I think it's going to be hard for investors to be satisfied." Lin's firm does not own shares of VeriSign.

He says that the company's ring-tone division, Jamba/Jamster,

continues to decline while the rest of the mobile market is growing. On the positive side, VeriSign's domain-name business and Web certificates are doing well.

Lin also sees momentum in VeriSign's SMS and MMS messaging services sector. There, VeriSign plays an important "go between" role for carriers in exchanging data between different types of networks.

It's this "behind the scenes," business-to-business model that has historically worked well for VeriSign, Lin says. The consumer arena is where the company struggles.

"Our financial and business results for the first quarter met our forecast and provide a solid start to the year," VeriSign CEO Stratton Sclavos said in a statement.

"We also continued to execute on our strategic plan in Q1 as we expanded our intelligent infrastructure portfolio through both internal development and key acquisitions in the security, content and messaging areas," he said.

Sclavos said during the conference call that the

company's acquisition of m-Qube is expected to close in May and that the company will provide any updated guidance after the deal is complete.

During the regular session, VeriSign stock gained 34 cents to close at $25.39.