RSA loses $25M due to charges, soft sales in Q2

RSA Security blamed a combination of one-time restructuring charges and a sluggish sales for a US$25.0 million loss in the second quarter of 2002, which it announced Wednesday.

"It's still an extremely tough selling environment out there," said Arthur Coviello, RSA president and chief executive officer, on a conference call held late Wednesday. "The selling environment is still oppressive."

For the quarter ended June 30, 2002, the company had a net loss, based on U.S. GAAP (Generally Accepted Accounting Principles), of $25.0 million, or $0.44 per share, down sharply from net income of $13.3 million, or $0.22 per share, for the same quarter in 2001.

The loss included a series of one-time charges, including a restructuring charge of $22.7 million, an $8.5 million charge due to a decline in the value of investments and $6.8 million in other charges. The charges were higher than the company had expected due to unplanned charges related to the weakening real estate market in greater Boston, Coviello said.

Excluding the one-time charges, however, RSA's core operating business, which excludes the operations of the company's RSA Capital division, posted a net loss of $2.1 million for the quarter, down from net income of $10.1 million in 2001's second quarter. The results translate to a loss of $0.04 per share. That was a penny better than the loss of $0.05 per share expected by the 17 analysts consulted by Thomson Financial/First Call, but down from the $0.17 per share profit RSA posted in the same period in 2001.

RSA tallied revenue of US$56.5 million, down from the $80.8 million the company brought in during the second quarter of 2001 but slightly higher than the $55.1 million forecast by the 11 analysts polled by First Call.

The company's higher-than-expected revenue illustrates RSA is "well-positioned for the time when IT spending inevitably does increase," Coviello said.

"This quarter's performance demonstrates an underlying strength in our core operations," he said.

The company, which is based in Bedford, Massachusetts, ended the second quarter of 2002 with $71 million in cash on hand, up from $69 million it had at the end of the first quarter.

For the quarter, RSA spent $13.9 million on research and development on a GAAP basis, down from the $16.1 million it spent in the same quarter last year.

The company also announced the appointment of Jeff Glidden as chief financial officer and senior vice president of finance and operations, after announcing that the man currently holding that position, John Kennedy, is retiring at the end of the month. Glidden had previously held the same position at customer relationship management company Stream International Inc.

RSA's stock (RSAS) on Nasdaq closed Wednesday up $0.35, or 13.21 percent, at $3.00.