Verity stock climbs 16%
Verity stock jumps nearly 16 percent in trading, after the company discloses that it expects to report record second-quarter revenues.
The company's stock finished trading at 18-3/8 a share, up 2-1/2 points from its close of 15-5/8 yesterday.
Verity said its preliminary second-quarter revenues are expected to jump 62 percent to $7.2 million for the quarter ending November 30 over the corresponding period a year earlier. The company expects to announce the quarterly figures December 17.
Net income is expected to reach $200,000, or 2 cents a share, compared with a net loss of $338,000, 8 cents per share, for the same quarter last year. Verity's earnings beat Wall Street estimates of a net loss of 6 cents a share, according to First Call.
Verity's CFO Don McCauley said Verity had lower revenues than what analysts had expected for its first quarter. He said not meeting analysts' estimates "is like being in the penalty box, and our stock dropped from $24 to $10 because we reported $8.8 million in revenue." Analysts expected between $10 million and $10.5 million.
"Because our stock had the air taken out of it back in September, we have clearly not been overvalued but very much undervalued. We haven't been one of those high-flying companies. When the rest of the market was flying high, we sat there like a stone," McCauley said, commenting on remarks made Thursday by Federal Reserve chairman Alan Greenspan that technology stock prices could be overvalued.
The company attributed 33 percent of its second-quarter revenues to product sales to Cisco Systems. "Cisco sales have really driven to push us above Wall Street estimates," spokeswoman Marguerit Padovani said.
She added that new partnerships also contributed to the revenue increase.
During the quarter, GTE Labs announced that it would use Verity's Search '97 information server for its intranet-based search applications. Verity also introduced its Text DataBlade module for Informix Universal Server and its Text Extender DataBlade.
"We're seeing strong demand for our Search '97 products, and we will remain focused on Search tools and applications," McCauley said. "We are looking to create a Search platform. We are not branching out," he added.
The company cut deals with several other companies during the quarter, including Ascend Communications, Nynex, Symantec, and Xerox.
In related news, Verity appointed Richard Lo as vice president of U.S. sales.