Tumbleweed CEO Jeff Smith told a conference call yesterday that the company is within shooting distance of sustainable profitability. That target will be achieved at a quarterly run-rate for the combined business of $9m to $10m, he said.

For the three months to March 31, the companies yesterday separately reported revenue of a total of $8.6m. Despite both reducing their losses, the companies said they saw sales slip sequentially and year-on-year, adding that things have started to perk up.

Tumbleweed reported first-quarter revenue down 28% at $5.8m and a net loss of $2.5m compared to a loss of $5.3m in the same quarter 2002. The loss per share was $0.08, a penny better than the company’s previous guidance.

Meanwhile, security software maker Valicert said it saw revenue down almost 12% compared to last year at $2.8m. The net loss was $1.9m, compared to a loss of $10.7m a year ago. Per share, the loss at the pro forma level was $0.04.

Although revenues were down slightly from the fourth quarter due to extended sales cycles, I am pleased with our start in the second quarter, Valicert CEO John Vigouroux said in a statement, projecting sales of $2.8m to $3.8m in the current quarter.

Smith said Tumbleweed’s first quarter suffered because of too much supply, limited demand, but said that the email security space has growing mind-share due to the spam pandemic and regulations such as HIPAA in the US healthcare market.

The companies also announced yesterday that, assuming the merger closes, Valicert’s Vigouroux will become Tumbleweed’s president and COO, replacing Doug Sabella, who resigned from the roles and a director’s role at Tumbleweed yesterday. Speaking to ComputerWire in late February when the merger was announced, Vigouroux said: Merging with Tumbleweed will allow us to bring more functionality to our mutual customers and incrementally expand into each other’s customer base.

Tumbleweed makes software and appliances for securing email with features such as encryption, archiving and spam and virus filter, while Valicert’s products are more focused on secure file transfer and transaction messaging.

Source: Computerwire