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Veritas reports flat revenue

The storage software company stays level for the second quarter of 2002, but it is rearranging upper management in hopes of fostering growth in the longer term.

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Stephen Shankland
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Veritas' storage software business stayed level for the second quarter of 2002, but the company is rearranging upper management in hopes of fostering growth in the longer term.

Veritas reported Tuesday net income of $26 million, or 6 cents per share, on revenue of $365 million. The company's revenue dropped 7 percent from the year-ago quarter, but earnings leapt up from the $129 million loss.

Including adjustments, the company had a net income of 14 cents per share, meeting the expectations of analysts surveyed by First Call.

Chief Executive Gary Bloom, who joined the company 20 months ago from Oracle, said in an interview that he's in the midst of "improving and optimizing our organizational structure to facilitate Veritas' growth plan."

More concretely, that means picking fellow Oracle alumnus Jeremy Burton to lead marketing, naming new chiefs for investor relations, international field operations, education, human resources, and mergers and acquisitions, and replacing Prashant Dholakia as chief of products to pool servers into cooperating "clusters" and Neal Ater as the leader of products to backup and restore data.

In technical departments, the result will be more discipline and "improved ability to bring products to market in a timely fashion," Bloom said. In investor relations and mergers and acquisitions, Veritas will be more efficient. And in international field operations, Veritas will pull in more revenue, Bloom said.

These changes are attracting more attention than the Mountain View, Calif.-based business' usual operations, financial analysts said. "The composition of Veritas' management team seems to be the single most important item on investors' agenda," wrote Morgan Stanley software analysts in a report. All executives from the pre-Bloom era should be viewed "as being high-profile candidates auditioning for their jobs on a daily basis."

While the changes are geared for Veritas' long-term plans, the company only recently began forecasting shorter-term results. Its first projections of the latter half of the year, Veritas said it expects revenue to remain level for the current quarter, at $350 million to $370 million, and increase with seasonal buying patterns in the last three months of the year.

Veritas' fortunes are tied to that of server makers such as Sun Microsystems, Hewlett-Packard and now IBM, and its business has likewise been hit by the slowdown in high-end computing spending.

Though there are signs that the overall economy is doing well, Veritas' business also is gated by corporate spending on computing hardware and software. This information technology spending rebound "is going to lag an economy recovery to some extent," Bloom said.