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Veritas gets unusual services boost in Q1

Tepid software sales

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A surge in services revenue carried Veritas to a strong first quarter. This will likely be the last period in which the storage software maker reports as a standalone company with Symantec waiting to close its buy of the firm.

Veritas pulled in $559m in revenue during the quarter - a 15 per cent year-over-rise from $486m in revenue during Q1 in 2004. That kind of double-digit growth is exactly what Symantec shareholders are hoping to see, although they may be spooked by the imbalance between a small rise in new licenses and a large jump in services revenue. Many analysts have warned that Veritas may not be able to match the fiscal health of its security software parent.

"Our results this quarter demonstrate the overall strength of our business, a continuation of the momentum we built exiting the fourth quarter and our customers' confidence with our strategic direction," said Gary Bloom, CEO at Veritas.

Veritas, however, only saw license revenue increase seven per cent in the quarter to $323m. Its services division did most of the growth grunt work, increasing sales 29 per cent year-over-year to $236m. Profit rose five per cent to $105m from $100m last year.

"With the combination of our strong performance in Q1, the normal seasonality of the second quarter and the ongoing activities related to the pending merger with Symantec, we are being cautious with our outlook for the June quarter," said Bloom.

Veritas is looking for a 2005 revenue growth rate of 11-12 per cent. ®

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