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Veritas Software

(VRTS) - Get Virtus Investment Partners Inc. Report

CFO Kenneth Lonchar gave an upbeat assessment of business for the first quarter.

Speaking at the Robertson Stephens technology conference on Wednesday, Lonchar said that when the storage-software company provided guidance in January, business was slightly ahead of expectations. Now that February is just about over, he said he was "slightly more positive" than he was in January.

In January, Veritas said revenue for the first quarter would range between $365 million and $370 million. Lonchar noted Wednesday that Veritas typically has drawn in 60% of its revenue for the quarter by its second month, in this case February. "We had a really good month (February)," he said.

Veritas already has signed three of the five largest deals Lonchar expected the company to seal this quarter, he said.

Lonchar also said he expects deferred revenue to grow by $15 million to $20 million -- three to four times the typical $5 million quarterly growth.

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Going on the defensive, however, Lonchar also addressed rumors of

Sun Microsystems

(SUNW) - Get Sunworks Inc. Report

cutting off its alliance with Veritas. Sun launched what it called "end-to-end" storage offerings earlier this month, raising questions about its future with Veritas.

Lonchar downplayed what effect a defection by Sun would have on Veritas, rather than dismissing such a possibility.

Sun pays Veritas an average $20 million in royalties through their longstanding relationship, Lonchar said. But Sun enjoys a discount on Veritas products, he said.

So to make up the $20 million if Sun severs its ties, Veritas would have to sell a lot less than what Sun has been selling, he said. There's a "good chance" of Veritas being able to do that, Lonchar said.

Shares of Veritas fell $2.31, or 6.1%, to close at $35.45 Wednesday. In after-hours trading, shares were down to $35.32.