Veritas: All Systems 'Go'

Veritas Software Corp. (Nasdaq: VRTS) posted a strong quarterly and year-end report today (see Veritas Claims Record Quarter). And execs said the second-quarter closing of its proposed merger with Symantec Corp. (Nasdaq: SYMC) is still on track.

The vendor's quarterly revenues were $574 million, up 16 percent sequentially and 14 percent year-over-year (see Veritas Rebounds and Veritas Posts Q4 Returns). Net income was $128.7 million ($.30 per share), down from last year's fourth-quarter net income of $190.6 million ($43 per share).

For the year, Veritas posted $2.042 billion in revenue, a 17 percent increase over 2003's annual figure of $1.747 billion, which in turn was an 18 percent increase over 2002. Net income for 2004 was $411.4 million ($.96 per share), up from $347.4 million ($.83 per share) in 2003.

"This is the highest revenue quarter in the company's history... It demonstrates the continued strength and overall health of our business," said CEO Gary Bloom on a call with analysts.

Bloom several times alluded to positive anticipation of the company's proposed merger with Symantec, which has made it through a key round of regulatory approval (see Veritas, Symantec Merger Passes Review and Symantec & Veritas: It's a Deal). In particular, he stressed that the closure of a number of large deals at the end of the quarter, after the merger announcement, signaled what he thinks is a "largely positive" reception by customers.Execs also boasted that the release of the company's Backup Exec 10.0 product is a big step forward (see Veritas Announces New Software). That product has more efficient disk-based backup and "This puts us in an incredibly strong position going in the new year," says Bloom.

On the call, Bloom cited a number of positives, including ongoing momentum from Veritas's acquisition of KVS (see No Brainer: Veritas Buys KVS). He also touted its recently enhanced partnership with Hewlett-Packard Co. (NYSE: HPQ), in which it becomes the preferred supplier of software for high-end products, starting in 2006. The partnership headed the list of "favorite partnerships" cited by Bloom in response to analyst queries. Another fave: Network Appliance Inc. (Nasdaq: NTAP).

Veritas has $2.55 billion in cash and short-term investments, just what it had last year at this time.

Veritas guidance was cautious, based on what would have happened without the merger. The company said it sees first-quarter revenue of $525 million to $540 million and net earnings of 18 cents to 20 cents a share. Diluted earnings per share on a GAAP basis are predicted to be $0.18 to $0.20 per share.

Mary Jander, Site Editor, Byte and Switch0