Blue Coat Systems, Inc. F2Q09 (Qtr End 10/31/08) Earnings Call Transcript

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2008-11-25 18:46:14.0

Tags: Packeteer, Call Transcript, Quarter, Earnings, Blue Coat Systems Inc., Sales Strategy, Federal Government, Operational Accounting, Sales Force Management, Sales, Government, Finance, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Samuel Wilson - JMP Securities.

Samuel Wilson - JMP Securities

Kevin, did you mention cash flow from operations, capex, and headcount?

Kevin Royal

Yes, I did mention cash flow from operations, which was about $27.0 million for the quarter. Capex for the quarter was $8.0 million and depreciation and amortization was $6.0 million.

Samuel Wilson - JMP Securities

And do you have the headcount number?

Kevin Royal

Yes, headcount was 1,278 regular full-time at the end of the second quarter and that compares with 1,276 at the end of the first quarter. We also had at the end of the second quarter 95 temporary employees and 93 at the end of the first quarter.

Samuel Wilson - JMP Securities

Brian, how strong is the federal government? You mentioned it in your prepared remarks. It sounds like it was maybe above your expectations.

And second, Packeteer did a little less revenue than you guided to three months ago. Was that simply a matter of macroeconomics or was there anything else going on there?

Brian M. NeSmith

With the federal government, I don’t think it was stronger than we expected. Usually this quarter is pretty strong in general. You look at the previous year I think we were roughly on the same order of magnitude on revenue as compared to the previous year because it’s the fiscal year end and fiscal year start for the federal government. But it was consistent with what we see on an annual basis on that segment.

As far as the Packeteer revenue, a little bit below expectations. I think the biggest driver there is probably just the amount of turnover we saw in the Packeteer sales organization has depressed that number a little bit but that’s probably the biggest factor that attributed to that.

Operator

Your next question comes from Daniel Ives - Friedman, Billings, Ramsey.

Daniel Ives - Friedman, Billings, Ramsey

With guidance for next quarter, you had a good quarter, good margins. With next quarter is it more conservatism? Is it closure rate assumptions that you are assuming? Can you walk us through how you are viewing next quarter and what you are seeing month-over-month, August, September, October.

Brian M. NeSmith

I think what a lot of people may not have grasped is how sensitive we are to the number of sales teams we have. And we saw actually a slight decrease in the number of sales teams where we had originally anticipated being up in the number of sales teams. And we are very much dependent upon those people out in the field and then generating a closing business. And we drew some attention to that this quarter.

 

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