ISS Numbers Fall Short

Internet Security Systems' earnings did jump 25 percent, though, thanks to the success of its Proventia appliance line.

Internet Security Systems Inc. on Wednesday reported earnings of $0.10 per share on revenue of $59.1 million in the second quarter. That represents a 25 percent jump in earnings from the same period last year, when the company had revenue of $60 million but earned just $0.08 per share.

However, the numbers fell short of the low end of the guidance the company provided to analysts, which called for revenue of $60 million and earnings of $0.13 per share.

The last three months have been busy ones for ISS. In that time, the Atlanta-based company has launched is Proventia appliance line and rolled out major updates to most of its software products. Interestingly, the amount of revenue coming from product licenses and sales fell during the quarter to $24.3 million from $30.1 million in the second quarter of 2002. But subscriptions took most of the slack, jumping from $22.7 million to $27.9 million.

Company officials attributed this to the introduction of the Proventia boxes, which rely on a subscription model. The Proventia rollout is so far exceeding ISS expectations and officials believe future appliance introductions will follow a similar pattern.

"Clearly the high note was the rapid acceptance by our customers of the Proventia appliances," said CEO Tom Noonan. "Many of our customers are calling it the silver bullet."