RSAS ( $26 up $28) RSA Core Operations Profit Rises Nearly 12 Pct
By Nicole Volpe
NEW YORK (Reuters) - Internet security software maker RSA Security Inc. (NasdaqNM:RSAS - news) said Tuesday its first-quarter earnings, excluding special items, rose nearly 12 percent as strong demand for its authentication and encryption services helped it buck the trend of weaker financial results amid the slowdown in high-tech spending.
RSA shares were up $3.15, or 13.7 percent, at $26.15 in morning Nasdaq trade after the company released its results. The stock still is down nearly 60 percent from its all-time high of $62.04, reached just ahead of the Nasdaq peak in March 2000.
The company, best known for its SecurID cards that allow users to log in securely to corporate networks from outside the office, said its earnings from core operations rose to $9.6 million, or 16 cents per share, from $8.6 million, or 13 cents per share, a year earlier.
Analysts had been expecting earnings from core operations of 15 cents to 17 cents per share, with a consensus forecast of 16 cents, according to research firm Thomson Financial/First Call.
Including the results of investments arm RSA Capital and costs such as goodwill amortization, RSA's net income fell to $8.8 million, or 14 cents per share, from $24.6 million, or 37 cents per share, a year earlier. The company reported income from investing activities dropped about 50 percent to $13.8 million from about $27 million.
RSA said revenues rose 21 percent to $76.3 million.
The company said it expects to continue to meet financial expectations.
``We are off to a solid start in 2001, meeting Q1 earnings expectations in a difficult economic environment,'' Chief Executive and President Art Coviello said. ``With a very strong bookings quarter, we expect to continue to meet our financial targets.''
In a conference call, Coviello pointed to the deals in the pipeline -- expressed as a positive book-to-bill ratio of greater than 1.1 to 1 -- as reason to believe the company could meet financial targets for the rest of the year.
``I think the fact we held so much in backlog is indicative of our conservatism, to make sure we are in a position to make our earnings numbers going forward,'' he said in a conference call, adding it was the strongest bookings quarter since the fourth quarter of 1999.
In a conference call following the report, Coviello said the company would continue its strategy of selling to network equipment makers in order to secure their wireless networks.
Earlier on Tuesday, the company said it had struck a deal with Swedish mobile phone maker Telefon AB L.M. Ericsson (news - web sites) (LMEb.ST) , which would use RSA encryption software in its entire line of mobile Internet-enabled terminals and phones.
Ahead of the first-quarter report, RSA shares had risen as high as $26.74 after the company said Monday it would meet its financial targets.
Since the shares hit a high of $62.04 March 9, 2000, the company has outperformed rival Network Associates Inc. (NasdaqNM:NETA - news) by about 83 percent.
Coviello said that, while RSA's own market value has dropped, he sees an opportunity to acquire privately held companies, which might have trouble in the current market raising capital.
``Notwithstanding our own drop in market value, the values of private companies have fallen precipitously even more,'' he said. ``I think that remains a tremendous opportunity for us going forward. Don't be surprised if we take advantage not only of our cash position, but the falling values of these private companies.'' |
