Veritas Profit Up 89%
Veritas Software Corp., the world’s No. 2 maker of data-storage software, said Tuesday that second-quarter profit almost doubled and it would buy back as much as $500 million of its shares.
Net income climbed 89% to 20 cents a share from $45.6 million, or 11 cents, the Mountain View, Calif.-based company said. That exceeded the company’s recently lowered forecast of 17 cents to 19 cents. Sales rose 19% to $485 million from $408.4 million a year earlier.
Veritas lowered its forecast July 6 after slack demand from U.S. businesses reduced revenue and profit, sending its shares down 36% that day. The company said it failed to close U.S. orders for its software, which copies, stores and retrieves data on networks. The final numbers and its current-quarter forecast were better than analysts expected.
“The June quarter wasn’t as bad as we thought, guidance is better than we thought and the buyback is certainly better news,” said Brent Bracelin, an analyst at Pacific Crest Securities, who rates the shares “outperform.”
Veritas said it would earn 19 cents to 21 cents in the current quarter. Sales, at $485 million to $505 million, will be higher than the average analyst estimate of $484.9 million from Thomson First Call. The company is expected to earn 21 cents a share, the average of 26 analysts surveyed by Thomson.
“It’s a little early to know if we are seeing improvement,” Chief Financial Officer Edwin Gillis said in a conference call. “Some of it was deals that slipped at the end of the second quarter. At least some of those deals have closed in the third quarter.”
The company aims to reach $2 billion in sales for the year, compared with the $1.98 billion estimate of analysts.
Veritas shares rose 87 cents to $19.04 in regular Nasdaq trading and jumped 46 cents more to $19.50 in after-hours trading, after earnings were released.
“To some extent our results were a mixed bag,” Chief Executive Gary Bloom said. “Our U.S. results, particularly in large enterprises, were weak, but then we had our European and Asia-Pacific region growing 44% and 34%, respectively.”
Veritas, whose clients include Amazon.com Inc. and EBay Inc., has boosted sales for eight quarters in a row. The company has 21% of the storage software market to EMC Corp.’s 31%.
Veritas on June 14 restated its 2001 to 2003 results to fix accounting errors, raising its profit by $80 million. Sales in the period were trimmed by $28 million, Veritas said.
The restatement brought Veritas closer to ending a Securities and Exchange Commission probe of its accounting. The company said in March that it would correct its results to fix accounting errors, the third revision in the last two years.
The first restatement last year fixed accounting for a barter deal with Time Warner Inc. The second also resulted from exchanges of programs for advertising that were booked incorrectly in 2000.
In the most recent restatement, the company said it wrongly deferred professional-services sales and improperly booked some estimated expenses.
