Veritas Rebounds

Veritas Software Corp. (Nasdaq: VRTS) today reported revenue and net income growth and boasted improved margins, increased cash, and the confidence of meeting its longtime goal of hitting $2 billion in revenue this year (see Veritas Revenues Up in Q3).

CEO Gary Bloom says he's happy about the results, even though the IT spending environment continues to be "challenging." Further, he notes that government spending, which was a big contributor to Veritas's figures last year at this time, didn't show up that much this quarter. And he says big deals of more than $1 million were down, dragging along sales of SAN management software, which was down 13 percent sequentially.

All that said, the figures were greeted positively by analysts on the conference call today. Revenues of $497 million were up 2 percent sequentially and 11 percent year over year; net income of $96.2 million or $0.22 per diluted share was up from $91 million or $0.21 cents per diluted share last quarter.

Gross margin was 84 percent; headcount was 7,400, up 327 people before the impact of acquisitions; and cash and short-term investments amount to $2.5 billion.

The report contrasts with that of last quarter, which disappointed Veritas execs (see Veritas Rides Earnings See-Saw). Bloom and others claim the company is expanding in its newly revamped data protection and backup lines and that competition is having a "neutral effect on Veritas sales all around," even though others, such as EMC Corp. (NYSE: EMC) were thought to be chipping away at Veritas last quarter (see Veritas Plots Its Backup Plan).Veritas execs spoke positively about the acquisitions made this quarter, of KVS Inc. in particular, though that company won't be adding to revenues substantially for another 12 to 18 months (see No Brainer: Veritas Buys KVS).

On the downside, analysts pounded away at the reduction in SAN management sales, one even questioning whether the slowdown pokes a hole in Veritas's hopes for achieving market share in the larger arena of utility computing (see Veritas Regroups). To all of it, Bloom insisted that the large-deal dropoff was part of the typical ebb and flow of revenue in the storage market.

Another question came up about Veritas's relationship with Cisco Systems Inc. (Nasdaq: CSCO), but Bloom said that the partnership is still too young and he's "not sure how it will play out."

Mary Jander, Site Editor, Byte and Switch