Altiris Reports Expensive First Quarter

Altiris reported $2 million in net income, or 9 cents a share, compared with $3.1 million, or 11 cents a share, for the same period a year ago.

Revenue increased 25 percent, to $46.9 million for the quarter. But charges of $1.8 million for acquired intellectual property, $937,000 for amortization of intangible assets, a $1.6 million write-off of in-process research and development, and $54,000 in stock-based compensation took its toll on the bottom line, according to Altiris, Lindon, Utah.

Greg Butterfield, president and CEO, said of the quarter "We had higher than planned spending, primarily related to Sarbanes-Oxley and legal costs."

Cost of Sarbanes-Oxley compliance alone cost Altiris about 2 cents per share, said CFO Steve Erickson. Legal costs were associated with separate, pending lawsuits with vendors PowerQuest and Symantec, he said. Additionally, "slower than expected closure rates on large transitions" dragged earnings down, said Butterfield.

Sponsored post

For the quarter, 50 percent of Altiris' income came from OEM agreements with Dell, Hewlett-Packard, and other vendors. Channel sales accounted for 32 percent, and 18 percent of Altiris' income was direct, said Erickson. Licensing was up 16 percent year-over-year, he said.

Income from Altiris' March acquisition of security vendor Pedestal Software kicked in during the first quarter, contributing about $2.4 million in revenue, said Erickson.

The Pedestal purchase cost Altiris $65 million in cash, but Altiris has hefty cash reserves, and closed the quarter with approximately $126 million in cash and marketable securities, according to Altiris.

Altiris' outlook for the rest of 2005 was less than rosy. The vendor lowered its yearly guidance slightly to between $207 million and $216 million, based on slower than expected sales volumes in Europe, and in the domestic SMB market, said Butterfield.