RSA Security said on Thursday that it lost $US13.7 million in the first quarter of 2002, due primarily to slow spending by enterprises caused by uncertainty in the economy.
The company has been hurt by "lower-than-expected IT and IS spending", said Arthur Coviello, president and CEO of RSA, based in Massachusetts, in a teleconference with analysts and media following the announcement. Many companies "are electing to go without rather than purchase" new products, he said.
Revenue for the first quarter of 2002, which ended March 31, was $55.5 million based on US Generally Accepted Accounting Principles, down from $76.3 million in the same quarter last year. The $55.5 million revenue total was in line with the projection the company offered in early April when it said it expected to tally between $55 million and $56 million for the quarter. The company's revenue figure was below the $57.1 million that analysts polled by Thomson Financial/First Call had expected.
RSA posted a net loss, including its RSA Capital division, of $13.7 million, or $0.24 per share, down from a profit of $9.8 million, or $0.16 per share, in 2001. For its core operating business, which excludes the RSA Capital division, the company lost $6.0 million, or $0.11 per share, down from a profit of $9.6 million, or $0.16 per share, in the first quarter of 2001. Analysts polled by Thompson Financial/First Call had projected that RSA would lose $0.10 per share for the quarter in its core business.
The company experienced smaller sales, in dollar value, and longer sales cycles in the quarter, Coviello said.
In an attempt to improve financial results for the second quarter, RSA will compensate for the state of the economy and spending by increasing its sales focus, structuring the company to cut the first-quarter loss in half in the second quarter, and reaching at least break-even in cash flow in the second quarter, he said. Coviello declined to immediately comment on whether those initiatives would require job cuts.
Further underscoring uncertainty about spending over the rest of the year, Coviello said RSA is rescinding the guidance for 2002 that it gave at the end of 2001. The company now expects slightly increased revenue at best, accompanied by a loss of between $0.04 per share and $0.06 per share, in the second quarter, he said.
Coviello said the company has no new information to share about the ongoing US Securities and Exchange Commission investigation concerning RSA that was made public in late January.