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Packeteer Earnings 'Disappoint'

CUPERTINO, Calif. -- Packeteer, Inc. (NASDAQ: PKTR), the global leader in WAN Application Optimization, today announced results of operations for the quarter ended June 30, 2007.

Net revenues for the second quarter 2007 were $32.4 million, compared with $34.2 million for the second quarter 2006. Net revenues also decreased sequentially from the $34.7 million reported in the first quarter 2007. GAAP net loss for the second quarter 2007 was $5.6 million or $0.16 per diluted share. This compares to second quarter 2006 GAAP net loss of $0.8 million or $0.02 per diluted share.

Non-GAAP net loss for the second quarter 2007 was $2.9 million or $0.08 per diluted share, compared to non-GAAP net income for the second quarter 2006 of $4.3 million or $0.13 per diluted share. Non-GAAP net income (loss) includes adjustments for stock-based compensation and amortization of purchased intangible asset and in-process research and development, net of the related tax impact. See our "Reconciliation of GAAP Net Income to Non-GAAP Net Income" for further information.

Total cash and investments of $81.3 million at June 30, 2007 decreased by $2.8 million from the balances of $84.1 million at March 31, 2007, due primarily to increased inventory. Accounts receivable of $24.1 million at June 30, 2007 represented 67 days sales outstanding, compared to $24.0 million representing 62 days sales outstanding (DSO) at March 31, 2007. Total inventories increased to $9.2 million at June 30, 2007, compared to $6.0 million at March 31, 2007, primarily due to revenues being below our expectations.

"Our second quarter revenues were clearly disappointing", said Dave Côté, president and CEO of Packeteer. "However, while we are dealing with a challenging and competitive environment, we are very encouraged by the initial response to our newly introduced iShaper product which is a new unified branch office appliance that marries the best of real-time WAN optimization, monitoring and shaping with wide area file services (WAFS) and key Microsoft services. We believe this is the kind of product that the market has been waiting for. We plan to aggressively invest in the ongoing launch of this important new product as well as invest in our other product development initiatives to take advantage of the growing market opportunities. At the same time, until we regain our revenue growth momentum, we will carefully monitor and limit non-essential expenses."

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