Bloom: Good Channels, Product Mix Help Veritas

Company also expands Foundation Suite into Linux space

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A well-balanced yet focused product mix, combined with an increasingly strong channel program, gave Veritas Software a strong finish to a good fiscal year 2001, said Gary Bloom, chairman and CEO of the company, in an interview with CRN on Tuesday after reporting the company's financials.

On Wednesday, Veritas also unveiled a new version of its Foundation Suite enterprise-class storage management and virtualization software application for Linux.

Veritas on Tuesday reported a loss of $204 million, or 51 cents per share, for its fourth quarter, which ended Dec. 31, compared with a loss of $125 million, or 31 cents per share, for the same period one year ago. That figure includes adjustments for acquisitions and for a onetime stock-based compensation package.

However, without those adjustments, the company had a pro forma income of $64 million, or 15 cents per share, compared with $84 million, or 19 cents per share, last year. Analysts were expecting earnings of 13 cents per share, according to Thomson Financial/First Call.

Revenue was up slightly for the quarter, reaching $374 million, compared with the $370 million reported for the same quarter last year.

For all of fiscal 2001, the company reported a loss of $651 million, or $1.63 per share, compared with $620 million, or $1.55 per share, for fiscal 2000. Revenue for 2001 was $1.5 billion, up about 24 percent increase over $1.2 billion reported last year.

In an interview with CRN after the earnings call, Bloom said the company increased its cash and investment holdings by $439 million and called the revenue growth of 24 percent nothing but spectacular. "We are entering a recovering economy in 2002 in a stronger position than ever," he said.

During the fourth quarter, Veritas had no weak spot, Bloom said. "We were strong in every geography with every country with every product."

Looking forward, Bloom said the company expects its first-quarter 2002 revenue to hit between $365 million and $370 million, which he said is higher than analysts' expectations of about $355 million. For the year, he said he expects revenue to be between $1.63 billion and $1.7 billion, compared with analysts' expectations of $1.63 billion.

The storage management software market as a whole should do extremely well in 2002, Bloom said. The year will continue to see storage hardware vendors try to shift their strategies toward a greater emphasis on software. "But the real barrier for them will be heterogeneous capabilities," he said. "They will continue to be challenged there, and that puts us in a stronger position."

While Gartner Dataquest currently counts Veritas as the No. 2 storage software vendor, Bloom said that ranking is deceptive because the software sales of EMC, the largest vendor, is still tied in part to its hardware sales. "Regardless of how you count revenue, we are by far the No. 1 independent," he said.

The channel, which for Veritas also includes OEM sales, continues to be a robust part of the company's marketing, Bloom said. He was not able to give specific figures about how much the company depended on the channel for sales, but he did say about 50 percent of the company's revenue comes from sales of entry-level products, especially Backup Exec, which are primarily sold through the channel.

Veritas on Wednesday unveiled a version of its Foundation Suite storage virtualization platform, which supports Red Hat Linux. The application, which company executives said optimizes enterprise storage hardware usage and simplifies administration of multi-platform environments, now supports Linux in the enterprise.

Included in the Foundation Suite are Veritas Volume Manager, which is aimed at increasing system and application availability and quickly recovering from system failures; Veritas File System, aimed at increasing system reliability and helping meet high-availability requirements; and Veritas FlashSnap, which does snapshots of data for use in application testing, data warehousing and batch processing.

Veritas' NetBackup application currently supported the Linux operating system. Future plans call for Linux support for the company's high-availability clustering solutions.

Pricing for Foundation Suite 1.1 for Linux starts at $1,500 per single-CPU server. FlashSnap pricing starts at $750.

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