Coverage of Trend Micro's Q3 Earnings Release (TMIC)

Oct.28.05 | About: Trend Micro (TMICY)

Trend Micro (ticker: TMIC), a global leader in network anti-virus and Internet content security software and services, released its third quarter earnings yesterday after the Tokyo Stock Exchange closed (prior to the opening of U.S. exchanges). Net sales grew 13.4% over the same period last year to a total of 18.0 billion yen (US$161.6 million). Operating income totaled 6.9 billion yen (US$61.7 million), an increase of .6% over last year, while net income was 4.4 billion yen (US$39.4 million), a 5% rise over the same period last year.

Sales in North America were strongest, increasing by 29% during the quarter compared to the same period in FY04. Latin America (Brazil & Mexico) was the only region in which sales were negative on a comparative basis, dropping by only about .1%. Sales in Japan increased by 6.6% and in the Asia Pacific region (includes Taiwan, Korea, Australia, Hong Kong, Malaysia, New Zealand, China, Singapore, Thailand and India) sales grew at a robust 20.5%. Sales in Europe (Italy, Germany, France, UK and Ireland) grew by a 10.5% clip.

In its earnings release Trend Micro credited strong sales in client/server solutions as the driver of its worldwide growth. Sales in this segment surged 41% year-over-year.

Trend Micro's second quarter acquisitions of InterMute and Kelkea, Inc., spurred enterprise sales with enhanced anti-spyware, anti-spam, and anti-phishing solutions.

Eva Chen, CEO of Trend Micro lauded the company's successful alliance with Cisco in delivering outbreak prevention solutions.

Fourth quarter 2005 (ending Dec. 31st) forecast for net sales is 20 billion yen (US$177 million at 113Y/US$1), with operating income estimated at 7.5 billion yen (US$66.4 million) and net income expected to be 4.6 billion yen (US$40.3 million).

During the 3rd quarter Trend Micro was listed for the second consecutive year on the Dow Jones Sustainability Indexes. According to Trend Micro's statement inclusion suggests, "... long-term value for shareholders based on corporate governance, environmental and social reporting, customer relationship management, strategic planning, risk and crisis management, and talent retention.

Trend Micro's Tokyo Stock Exchange traded shares (ticker: 4704) were up over 2.5% in intraday trading today. Its ADRs (ticker: TMIC) closed Thursday down 2.35% at $29.47 on half of its 3-month average volume* (its Tokyo traded shares finished Thursday down 2.0%).

*Note Trend Micro's ADRs 3-month average volume is approx. 9,500. I wonder if its investor relations can't do a better job in attracting more investor interest... My research shows Trend Micro carries zero debt, has strong and increasing global sales, and offers an annual dividend. Not to mention its core products/services are in an area of ever-growing importance. Its ADRs are trading at nearly 50% off its 52-week high of $57.74.