SonicWall Warns of 1Q Shortfall

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SonicWall, a maker of Internet security appliances, warned Thursday it expects first-quarter earnings to fall short of Wall Street expectations.

Executives at the company cited a sluggish economy in its preliminary first-quarter report.

SonicWall, based here, said it expects pro forma net income of between $1.5 million and $2.5 million on revenue of $28 million to $29 million for its first quarter. That compares with pro forma income of $5.2 million on revenue of $24.6 million in the same quarter last year.

The company expects first-quarter pro forma earnings of 2 cents to 3 cents per diluted share, short of First Call/Thomson Financial consensus estimates of 9 cents per share.

In a conference call, Cosmo Santullo, SonicWall president and CEO, said the company did not achieve the sales growth it had hoped for in the large enterprise market.

"We didn't expect our products targeting larger networks to represent a significant amount of growth for the first quarter, but we did expect a level of growth that did not materialize," he said. "We believe the overall economic environment in the first quarter contributed to delayed purchases in these accounts."

The company continued to see strong demand for its core SMB products, he said. But the average revenue per unit of its Pro Product line was lower than expected in part due to pricing issues related to new services combined with the products, he said.

SonicWall plans to report its complete first-quarter earnings results on April 18.

Shares of SonicWall were trading at $6.95, down $3.13, in midday trading Thursday.

Competitor Check Point Software Technologies also warned Thursday that its first-quarter earnings would fall short of estimates due to slow IT spending.

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