NTCT

[BigSully1]

NetScout Systems Reports Financial Results for Third Quarter of Fiscal 2008
Monday February 4, 4:05 pm ET  
Third Quarter Revenue Doubles Year-over-Year with the Acquisition of Network General


WESTFORD, Mass.--(BUSINESS WIRE)--NetScout Systems       GAAP     Non-GAAP  
Revenue     $53.7 million     $60.0 million  
Net income (loss)     ($3.1) million     $6.2 million  
Earnings (loss) per share     ($0.09)     $0.17  

NetScout Systems, Inc. (NASDAQ: NTCT - News), an industry pacesetter for advanced network and service assurance solutions, today announced financial results for its third quarter of fiscal year 2008, ended December 31, 2007. Financial results include the acquisition of Network General as of November 1, 2007.

Total GAAP revenue for the third quarter of fiscal year 2008 was $53.7 million, up 103% year-over-year. Non-GAAP revenue for the third quarter was $60 million. Non-GAAP revenue excludes the purchase accounting adjustment to record at fair value the acquired Network General deferred revenue. Product revenue on a GAAP basis was $36.1 million, up 120% year-over-year.

GAAP net loss for the quarter was $3.1 million, or a net loss per share of $0.09. GAAP loss from operations was $2.4 million. On a non-GAAP basis, net income was $6.2 million or $0.17 per diluted share, and non-GAAP income from operations was $12.6 million. Non-GAAP income from operations excludes the purchase accounting adjustment to record at fair value the acquired Network General deferred revenue, as well as share-based compensation expenses, amortization of acquired intangible assets, inventory fair value adjustments and non-recurring integration expenses. Non-GAAP net income excludes these effects as well as their related impact on the provision for income taxes. A reconciliation between GAAP and non-GAAP results is included in the attached financial tables.

"We are pleased with our financial results this quarter following the recent acquisition of Network General," said Anil Singhal, President and CEO of NetScout Systems. "These strong results reflect the market's endorsement of the prospects of the combination of our two companies. We have brought together two world leaders in network-based application performance management solutions and we are well on our way to achieving our goal of providing our customers with the most advanced technologies in a unified product portfolio. In the upcoming fiscal year we will be bringing to market a modular suite of performance management solutions that will protect our customers' investments and further position NetScout for future revenue and profitability growth. Our integration efforts are proceeding smoothly and we look forward to sharing our goals and positive results from the new and larger NetScout in the coming year."

Financial and Company Highlights for the Third Quarter 2008:


NetScout acquired privately-held Network General on November 1, 2007. The transaction was valued at approximately $212 million. The purchase price consisted of a combination of six million shares of NetScout common stock, $100 million of senior secured floating rate notes and approximately $56 million in cash.
-GAAP revenue increased 103% year-over-year and 82% sequentially as a result of the acquisition and organic growth. Non-GAAP revenue increased 127% year-over-year and 103% sequentially.

-GAAP product revenue increased 120% year-over-year and 91% sequentially.

-Cash and cash equivalents and short and long-term marketable securities were $81.9 million down from $108.9 million in the prior quarter.


On December 21, 2007, NetScout refinanced the original seller's loan issued in connection with the acquisition of Network General. The new credit agreement, a $100 million five-year term loan and a $10 million revolving credit facility, was negotiated at favorable rates with a syndicate of banks led by KeyBank. The proceeds of the term loan were used to redeem all of the outstanding senior secured floating rate notes due 2012.
Guidance:

For the fourth quarter of fiscal year 2008, NetScout expects GAAP revenue to be in the range of $54 million to $58 million and GAAP net loss per share to be in the range of ($0.18) to ($0.22). NetScout expects non-GAAP revenue to be in the range of $60 million to $64 million and non-GAAP earnings per diluted share to be in the range of $0.04 to $0.08. The fourth quarter of fiscal year 2008 non-GAAP revenue and earnings estimates exclude the purchase accounting adjustment to fair value of approximately $6.3 million of Network General's deferred revenue, share-based compensation expenses of approximately $1.3 million, amortization of acquired intangible assets of approximately $1.8 million, and integration expenses of approximately $5.4 million. While NetScout expects fourth quarter results to be stronger than the third quarter, results will be somewhat dampened as Network General's sales force transitions into its former first fiscal quarter which historically has been weaker.

For the fiscal year 2009, NetScout expects GAAP revenue to be in the range of $250 million to $260 million and GAAP earnings per diluted share to be in the range of $0.08 to $0.18. NetScout expects non-GAAP revenue to be in the range of $260 million to $270 million and non-GAAP earnings per diluted share to be in the range of $0.50 to $0.60. The fiscal year 2009 non-GAAP revenue and earnings estimates exclude the purchase accounting adjustment to fair value of approximately $11.2 million of Network General's deferred revenue, share-based compensation expenses of approximately $6.9 million, amortization of acquired intangible assets of approximately $6 million, and integration expenses of approximately $1.5 million. The revenue guidance for FY 2009 recognizes the logistical and market challenges of the integration with Network General as NetScout combines and reorganizes the sales force and introduces new and integrated products to the market early in the fiscal year.

Use of Non-GAAP Financial Information

To supplement the financial measures presented in the Company's press release in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company also presents non-GAAP measures relating to revenue, product revenue, income from operations, net income and earnings per diluted share which were adjusted from amounts determined based on GAAP to exclude the purchase accounting adjustment representing the fair value of Network General's deferred revenue, share-based compensation expenses, amortization of acquired intangible assets, inventory fair value adjustments and integration expenses.

These non-GAAP measures are not in accordance with, and should not be considered an alternative for measures prepared in accordance with GAAP, and these non-GAAP measures may have limitations in that they do not reflect all of NetScout's results of operations as determined in accordance with GAAP. These non-GAAP measures should only be used to evaluate NetScout's results of operations in conjunction with the corresponding GAAP measures. The presentation of non-GAAP information is not meant to be considered superior to, in isolation from or as a substitute for results prepared in accordance with GAAP.

The Company believes these non-GAAP financial measures will enhance the reader's overall understanding of NetScout's current financial performance and the Company's prospects for the future. Presenting the GAAP measures on their own would not be indicative of the Company's core operating results. Furthermore, NetScout believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures provide useful information to management and investors regarding present and future business trends relating to its financial conditions and results of operations.

Company management regularly uses supplemental non-GAAP financial measures internally to understand, manage and evaluate its business and to make operating decisions. These non-GAAP measures are among the primary factors that management uses in planning and forecasting future periods.

CONFERENCE CALL INSTRUCTIONS:

The Company invites shareholders to listen to its conference call today at 4:30 p.m. ET, which will be webcast live through the Company's website at http://www.netscout.com/investors. Alternatively, people can listen to the call by dialing 866-701-8242 for U.S./Canada and 706-634-5113 for international callers and using conference ID: 31263476. A replay of the call will be available after 7:30 p.m. ET on February 4 for approximately one week. The number for the replay is 800-642-1687 for U.S./Canada and 706-645-9291 for international callers. The conference ID is: 31263476.

About NetScout Systems

NetScout Systems, Inc. (NASDAQ: NTCT - News) has been an industry leader for advanced network and service assurance solutions for over twenty years. NetScout's breakthrough technology solutions provide trusted, comprehensive real-time and historical performance intelligence, including advanced early warnings and rapid, definitive problem analysis. These capabilities are vital to IT operators who are accountable for reducing the Mean Time to Resolution. The world's largest enterprises, government agencies, and service providers depend upon NetScout's nGenius and Sniffer (formerly Network General) brand solutions to assure service levels to their users by reducing or preventing disruptions and degradations. More information about NetScout is available at http://www.netscout.com.
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[sir_joke]

anyone been following this one? It's setting up for an excellent long term trough and wave pattern in the charts/// range $9 to $15. On the upswing over the last week heading for $15 by Sept.

this is a steady trading money-maker.

cheers,
SJ

[sir_joke]

NetScout continues to amaze the investing industry by staying in business and doing WELL!

http://biz.yahoo.com/e/080724/ntct8-k.html

Beats the estimates by $.02.

up $1.50  up 14% on the news.

Cheers,
SJ

[sir_joke]

going strong and with another upgrade!

Canaccord Adams Boosts Price Target on NetScout Systems (NTCT) to $18.50
10:52 AM EDT July 25, 2008
Canaccord Adams boosted its price target on NetScout Systems Inc. (Nasdaq: NTCT) from $15 to $18.50, maintaining their Buy rating, following a "solid" Q1 report.

The firm said, "We continue to believe NetScout is well positioned in the packet flow/packet analytics market, and that the acquisition of Network General will position the company well for strong growth for the next several years. The virtualization of the server, storage, and network components of an enterprise creates further demand for the company's capabilities."

Shares of NetScout are trading up 12.3% today to $12.65, but there is still 46% upside to Canaccord's $18.50 price target.

[sir_joke]

still steadily climbing... currently at $14.40 and heading for $18 new price target.

cheers,
SJ

[sir_joke]

news out with integration source:



         

Investor's Business Daily
Network General Acquisition Gives NetScout A Good Hand To Play
Thursday August 21, 5:47 pm ET
Marilyn Alva


Now that NetScout Systems is united with Network General, customers using their diagnostic network tools won't have to split their business between the two. They can have it all.
That's the way NetScout (NasdaqGS:NTCT - News) sees it as it works to bring together functions of both product lines.

The firm's acquisition of Network General last November gives NetScout the means to play the other side of the coin in managing large-network problems.

NetScout detects and analyzes network problems that might interfere with performance and speed rather than, say, security breaches that let hackers in. Security outfits deal with the hackers.

NetScout's nGenius product line spots blips on the network, while Network General's Sniffer technology (now under the nGenius banner) figures out how they happened. Network engineers can then fix problems before they get out of hand.

Complementary Products

Rather than compete, the products complement each other. Before the merger, customers would often buy from both firms.

"We're no longer divided," said NetScout Chief Financial Officer David Sommers.

As it integrates operations and products, NetScout aims to make it easier for customers to buy both types of products from one source. Combining the two sales forces is one way.

"It was absolutely the right decision," said Mark Kelleher, analyst with Canaccord Adams. "It made NetScout break out of its comfort zone and into a much larger company with a much bigger addressable market."

The merger doubles NetScout's size. Management expects revenue in fiscal 2009, which ends next March, to total $250 million to $260 million.

In the fiscal year before the merger, NetScout took in $102 million. In the recent year ended in March, which includes about four months from Network General, revenue totaled $169 million -- a 65% jump from the earlier year.

As cost synergies from the merger kicked in, operating margin in the first fiscal quarter grew to 18.9% from 9.9% in the prior quarter and 14% from the full fiscal year.

"We have taken $20 million of costs and expenses out of the combined business," Sommers said. About 100 jobs of a combined 900 were cut.

"We're in a much stronger position now than before the acquisition," Sommers said. "But we still have to work on product integration."

The first integrated product is expected to come out in a few weeks while a more fully integrated system is set to debut at the end of the year.

The merger also gives NetScout a stronger hold among wireless carriers.

Network General, says analyst Kelleher, had better penetration into the carrier market, something NetScout had been trying more recently to break into.

"They kind of leapfrogged into that market," Kelleher said.

NetScout now sells to all the major telecom carriers in the U.S. and several overseas. The market is expected to grow more rapidly as carriers continue to launch third-generation products, such as Apple's (NasdaqGS:AAPL - News) newest iPhone, which uses AT&T (NYSE:T - News). AT&T is one of NetScout's customers.

NetScout expects wireless business to power growth outside the U.S. as well. About 20% of the firm's business now comes from outside North America.

NetScout's top three markets are telecom, financial services and government defense. Financial services made up 28% of order volume in the last quarter, government 22% and telecom 13%.

Some NetScout observers cringe when they hear financial services -- ailing from subprime issues -- make up such a large portion of the company's business.

But execs say they haven't seen a falloff in demand from such customers, at least not yet. That's because products target more profitable areas of financial services, such as high-speed automated trading, where volume continues to grow.

"Those infrastructures cannot be out for a matter of minutes because the impact would be too great," Sommers said. "And we sell to people who are implementing those very important infrastructures -- investment banks and broker dealers."

Of five $1 million deals NetScout closed in the last quarter, two were from investment banks.

Just as key, banks and other large corporations use NetScout's technology to monitor performance of their enterprise networks.

"NetScout gives granular details about data and applications travelling over wide-area networks," said Alex Kurtz, analyst with Merriman Curhan Ford. "It shows where you can make improvements, where the bottlenecks may occur."

Revenue Growth

Total revenue in NetScout's last quarter rose 117% from last year's same time to $60.6 million. Earnings went up 100% to 16 cents a share. Analysts polled by Thomson Reuters estimate full-year profit will grow 31% to 63 cents a share and go up 21% the next year.

Besides AT&T, some of NetScout's biggest clients are Merrill Lynch (NYSE:MER - News), ExxonMobil (NYSE:XOM - News), Wal-Mart (NYSE:WMT - News), Dell (NasdaqGS:DELL - News), Oracle (NasdaqGS:ORCL - News) and the Defense Department.

Retail makes up less than 5% of revenue, Sommers says. Manufacturers also don't use much of NetScout's products.

"We focus on selling to market segments that require detailed, real-time solutions," Sommers said. He says rival Cisco (NasdaqGS:CSCO - News) sells its solutions into a broader market where network management isn't as critical.

Diagnostic tools to run a network more efficiently "is not Cisco's focus," says Kelleher. But, he says, it is NetScout's focus.