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Net security vendors suffer

Internet security companies Secure Computing and NeTegrity report lower revenues and bigger losses than last year.

Two Internet security companies reported lower revenues and bigger losses today than in the first quarter of 1996.

Secure Computing (SCUR) said its revenue climbed 18 percent over the previous quarter, but it had both lower revenue and a bigger loss than in the first quarter of 1996.

Secure, whose founder/chairman Kermit Beseke stepped down early this year when the company missed Wall Street's fourth-quarter expectations, had first-quarter revenues of $10.6 million, compared to $11.1 million in the first quarter of 1996. It lost $2.9 million last quarter, or 19 cents a share, compared to a $171,000 profit or 1 cent a share in the first quarter of 1996.

The latest quarter's results beat the consensus of Wall Street analysts, who expected Secure would lose 24 cents a share, but the estimates ranged from losses of 10 to 37 cents.

NeTegrity (NETE), which is making the transition from a reseller to an enterprise security firm, said revenue in its first quarter dropped 26 percent, to $987,000, over the same quarter in 1996. Its net operating loss was $648,000, or 7 cents a share, compared to a $33,000 loss in the three months ended March 31, 1996.

Secure Computing's Jeff Waxman, chairman and CEO, highlighted the company's cost-cutting efforts. Operating expenses dropped 19 percent over 1996's fourth quarter. He also said the company's firewall for Windows NT has been well received.

Secure has had trouble rationalizing its marketing efforts with those of Border Network Technologies, another firewall vendor that Secure acquired in August. The company has centralized marketing efforts in a new San Jose, California, sales office and last month announced a partnership with ISP Netcom

NeTegrity has been primarily a reseller of Check Point Software Technologies' (CHKPF) FireWall-1 software, but it pushing into enterprise security management software.

NeTegrity expects to release the 1.0 version of its SiteMinder management software this quarter. It also is adding a network consulting practice.

The company recently formed a joint venture with Encotone to market TeleID, an acoustic smart card that delivers user identification and secure transactions for data and voice applications. It remains the leading U.S. reseller of Check Point's firewall product.