ION Networks misses estimates in fourth quarter

Network security provider ION Networks posted a wider-than-expected loss in its fourth quarter Thursday, losing $2.7 million, or 19 cents a share, on sales of $5.7 million.

Its shares closed up 2 19/64, or 38 percent, to 8 11/32 ahead of the earnings report but tumbled to 7 3/4 in after-hours trading.

The lone analyst following the stock predicted ION (Nasdaq: IONN) would lose 6 cents a share in the quarter.

Company officials said the wider-than-expected loss was primarily due to a non-cash in-process research and development charge of $3.5 million associated with the acquisition of SolCom in the fourth quarter as well as investments in sales and marketing personnel and research and development.

The $5.7 million in sales marks a 75 percent jump from the year-ago quarter when it lost $6 million, or $1.10 a share, on sales of $3.2 million.

For the fiscal year, ION Networks lost $5.3 million, or 44 cents a share, on sales of $22.7 million compared to a loss of $6 million, or $1.09 a share, on sales of $12.7 million in fiscal 1999.

ION officials said the watered down fourth-quarter results were impacted because some shipments made in the quarter were not recognizable as revenue due to the newly codified revenue recognition standards issued by the Securities and Exchange Commission. As a result, ION will record revenue of approximately $1.1 million that it expected in the fourth quarter in future periods sometime in fiscal 2001.

"While our quarterly revenues were below expectations due to the implementation of the newly codified SEC standards, our fourth quarter and audited year end growth rates of 75 and 79 percent, respectively, confirm our growth strategy and underline the significant opportunity and criticality of networks to companies and the associated demands for cost effective network infrastructure management of these mission critical business assets," said CEO Stephen Gray in a prepared release.

ION shares hit a 52-week high of 44 in March after falling to a low of 3 3/8 last June.

First Call Corp. consensus expects it to lose 16 cents a share in fiscal 2001.

The lone analyst covering the stock rates it a "strong buy."