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October 15, 1998

VERITAS DOES RECORD BUSINESS IN Q3

By CBR Staff Writer

Veritas Software Corp, the storage management software company, announced a huge jump in both revenues and profits for its third quarter, and the Mountain View-based business said both domestic and international sales were strong. Net profits rose by 87% to $12.6m for the three months through September and revenues climbed 91% to $45.8m. Per share earnings of $0.24 were well in excess of most analysts’ estimates and the good news will help repair the damage to Veritas’ share price which fell by more than 40% earlier this month as investors reacted badly to the proposed $1.6bn acquisition of Seagate Software’s NSMG group (CI No 3,511). The financial results were released after the close of trading on Thursday, but Veritas’ share price has already recovered more than half the lost ground, closing up 8% at $37. Chief executive, Mark Leslie said the strong revenue performance was underpinned by sales through OEM partners Sun Microsystems Inc and Hewlett-Packard Co. For the first time ever, Sun accounted for 10% of revenues in the quarter, and sales via HP and Sun are still growing fast, the company said. Windows NT- based sales accounted for less than 10% of business in the quarter but this is set to expand rapidly as Seagate’s NSMG becomes a new channel for distribution. Veritas software is also due to be bundled with NT 5.0 when it ships. Operating margins were up 2% on last year’s figure at 26% and Veritas reconfirmed its belief that the NSMG acquisition would be accretive to earnings in its first year.

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