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RSA Security Posts Higher Profit and Revenue

Revenue was up 10.5%, and the software company posted a profit for the quarter.

Updated from 5:16 p.m.

RSA Security


boosted first-quarter revenue by 10.5% year over year and earned a small profit, the company reported after the market close on Thursday.

"RSA is back," said Art Coviello, CEO of the Bedford, Mass., security software developer. RSA lost 13 cents a share for all of 2002, and other companies in the security software sector, including

Network Associates

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, which

reported a loss earlier in the day, are having a tough quarter.

RSA's revenue for the first quarter of 2003 was $61.3 million, compared with $55.5 million a year earlier. Net income was $1.7 million, or 3 cents per diluted share, compared with a net loss of $13.7 million, or 24 cents a share in 2002, according to generally accepted accounting principles. Both profit and revenue exceeded Wall Street's expectations.

Analysts polled by Thomson Financial/First Call had expected the company to earn a penny a share on revenue of $59.3 million

The company increased cash in the first quarter by $12.4 million to $115.4 million.

Guidance for the current quarter straddled analysts' expectations. The company expects second-quarter revenue to range from $58 million to $63 million, compared with Wall Street's consensus of $61.35 million. GAAP earnings per share, the company projects, will range from break-even to 4 cents a share. EPS consensus is for earnings of 3 cents a share in the quarter, as gathered by Thomson Financial/First Call.

Coviello said business was boosted by strong sales to health care providers needing to boost security to comply with new federal privacy and security regulations. Interestingly, there was some drop-off in expected defense-related spending in late March. "I guess the Pentagon had a few other things to do (as the war started)," he said.

The stock gained 67 cents, or 10%, to $7.34 in after-hours trading.