Trend Micro, ISS Report Solid Third Quarters

Increased demand in the enterprise for security services helped Trend Micro and Internet Security Systems (ISS) post solid earnings this week, and both companies expect the upward swing to continue in the coming quarter.

Both companies reported numbers for the fiscal third quarter that met or exceeded analysts' estimates. Trend Micro posted consolidated net sales of $161.6 million, operating income of $61.7 million and net income of $39.4 million. The net sales numbers are up 13 percent year-over-year. ISS said revenue was $82.845 million, a 14 percent increase over the same quarter last year. Net income was $9.792 million, a 53 percent increase over the third quarter of 2004.

In a conference call with media and analysts, Trend Micro CEO Eva Chen credited the company's focus on recent security hot-button issues with producing the positive financial results.

"In the third quarter, we delivered enhanced content security solutions against spyware, spam and phishing, and we were integral in Cisco's outbreak prevention services--services that combine the benefits of our Enterprise Protection Strategy and Cisco's Self-Defending Network," she said. "These efforts strengthen our potential for growth now and in the future."

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One big key to helping the company boost its number and profile during the quarter was its new alliance with Cisco Systems. The two have hooked up to deliver jointly developed outbreak-prevention solutions, including the Cisco Incident Control System (CICS).

Trend Micro saw a 29 percent year-over-year revenue increase in North America and 20 percent in Asia. North America's Q3 performance was a 20 percent increase in revenue compared to the previous quarter, and the company's worldwide growth was buoyed by strong sales in client-server solutions, which saw a 41 percent rise in global revenue year-over-year. Client-server demand also helped the company garner a 27 percent increase in revenue from enterprise sales in both the United States and Asia. Enterprise sales were further aided by the anti-spyware, anti-spam and anti-phishing solutions Trend Micro acquired when it bought InterMute and Kelkea earlier this year.

Trend Micro officials project consolidated net sales for the fourth quarter ending Dec. 31 to be $177 million. Operating income and net income are expected to be $66.4 million and $40.3 million, respectively.

In a separate conference call, ISS president and CEO Tom Noonan also credited strong enterprise sales for the company's encouraging financial results.

"This was our seventh consecutive quarter of double-digit, organic revenue growth," he says. "Over the last quarter, we increased our enterprise market share, providing us with a solid base for expanding on the comprehensive, integrated security technologies and services we are able to offer our customers."

For the fourth quarter, ISS expects revenue ranging from $88 million to $92 million. The company anticipates annual revenue to be between $327 million and $331 million.

Security sector pace-setter Symantec will report its earnings on Nov. 1.