Bloom: Channel Fuels Solid 3Q For Veritas

For the quarter ended Sept. 30, the Mountain View-based storage software vendor posted revenue of $366 million, up 7.6 percent from $340 million a year earlier. Third-quarter 2002 earnings were $36 million, or 9 cents per share, compared with a loss of $162 million, or 40 cents per share, a year ago.

The economic slump has changed the nature of the storage business, which is now primarily driven by a large number of small transactions rather than big deals, Bloom said. "And this plays into the hands of our channel partners," he said.

For the fourth quarter, Bloom said he expects some sequential growth in line with Wall Street expectations, based on historical trends for Veritas. "We're not expecting a material budget flush. We'd be happy if we get it, but it's not expected," he said. "For CIOs, using up all the budget dollars at the end of the year is not fashionable."

Veritas' channel business is rising as a percentage of overall revenue, but its OEM business is slipping. For the third quarter, OEM sales accounted for 11.9 percent of revenue, compared with 13.3 percent in third-quarter 2001 and 17.7 percent in third-quarter 2000. Bloom attributed the decline to a drop in box shipments by OEM customers.

"Box shipments will continue to be constrained going forward," he said. "So we expect our OEM business to drop moderately as a percentage of our overall business. And as revenue is expected to be relatively flat, the OEM business will also drop in terms of revenue."

Veritas has about 5,620 employees, down slightly from 5,670 in second quarter but up from 5,500 a year ago, Bloom said.