Veritas Edges Ahead of Lowered Estimates

The storage software firm could benefit from companies' security worries after Sept. 11.
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Veritas Software

(VRTS) - Get Report

, which makes software that helps companies retrieve lost data, reported results for its fiscal third quarter slightly better than analysts were expecting.

The company said excluding certain items, it saw net income of $51 million, or 12 cents per share, on revenue of $340 million. Analysts were expecting earnings of 11 cents per share on overall revenue of $339.4 million, according to Thomson Financial/First Call.

In the year-ago period, Veritas earned 16 cents per share on $317 million in revenue, which means current quarter sales grew 7% from the same quarter a year ago.

In Tuesday trading, Veritas shares rose 5.4%, or $1.50 to $29.43 prior to its earnings announcement. After it transmitted its numbers to investors, shares rose to $30.50 in after hours trading, according to Reuters Instinet.

Including losses for the amortization of acquisitions and a $16 million loss on strategic investments, Veritas lost $162 million, or 40 cents per share.

Veritas is one of a handful of companies that some say could actually benefit from the aftermath of the Sept. 11 terrorist attacks on the U.S. The company's software helps firms recover lost or damaged data, and ensures executives can access information at any time. Because the destruction of the World Trade Center in New York made horrifically apparent the importance of backup data systems, some analysts have said Veritas' long-term sales could benefit.

"`Although storage was once treated with relative complacency, it has quickly become the strategic infrastructure component that keeps companies open for business," said Gary Bloom, CEO of Veritas, said in a statement. "Whether our customers are working directly with us or through our channel partners, they know that their IT investments and corporate data are more effectively utilized and safe with Veritas."

Others have cautioned, however, that over the short term, increased sales won't likely be seen as companies take time to evaluation what specific technologies they need.

After its fiscal second quarter, ended June 30, Veritas tempered its previous guidance for year-over-year revenue growth. While its executives had said revenue would grow 35% to 50% on an annual basis, the company gave a new, muted range of just 25% to 35% growth.

At the time, CFO Ken Lonchar also took down full-year earnings projections to between 73 and 74 cents per share. That was below the 84 cents analysts were expecting at the time. But since then, myriad estimate cuts by several analysts have meant the company is now expected to earn only 64 cents per share for the entire fiscal year.

CEO Bloom said he still thought Veritas had "a shot" at meeting guidance for 25% to 35% revenue growth. On the company's conference call, however, he said he remained comfortable with analyst estimates of just 22% revenue growth year over year.