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Verity won't meet estimates

Verity anticipates doing worse than analysts expected for its third quarter, but Wall Street doesn't seem to mind.

Search software vendor Verity (VRTY) said it anticipated doing worse than analysts had expected for its third quarter, but Wall Street didn't seem to mind.

The company's stock closed up at 8-3/16, up from yesterday's close of 8.

Verity's third quarter is expected to post a net loss of $10.8 million, or $1 a share, for the quarter ending February 28, compared with net profits of $112,000, or 1 cent a share, for the quarter a year ago.

But excluding a one-time acquisition charge, Verity would have posted a loss of $800,000, or 7 cents per share. Wall Street, however, had expected a loss of 1 cent per share, according to First Call.

Verity spokesperson Don McCauley defended the company's performance, citing a 52 percent rise in revenues for the past three quarters over the same period a year ago. "It's a strong growth situation for us," he said.

The company expects revenues of $11.1 million for the quarter, compared with $8 million for the same quarter 1996. But revenues over the previous quarter slowed by 4 percent.

Software sales accounted for $9.1 million of Verity's revenues, up sharply from $6.4 million for the third quarter 1996 but down from the $9.7 million earned in the previous quarter.

McCauley said the second quarter was hard to beat considering a $3.9 million sale to Cisco Systems during that three-month period. The deal marked Verity's single largest transaction to date.

Verity expects to issue its third-quarter results on March 19.