Bloomberg News

SurfControl Posts Loss on Increased Research Costs (Update2)

May 01, 2007

SurfControl Plc, a maker of software that blocks unwanted e-mails, posted a third-quarter loss after costs related to the purchase of BlackSpider Technologies and increased spending on research and development.

The net loss was $879,000, or 3.2 cents a share, compared with a profit of $672,000, or 2.3 cents, a year earlier, the Cheshire, England-based company said today in a statement. Revenue rose to $32.5 million from $25 million.

SurfControl agreed to buy BlackSpider Technologies Ltd. for 20 million pounds in July to meet demand for Internet security services. Costs, including research and development and general and administrative expenditure, rose in the quarter, the company said.

``About half of the increase is due to those costs related to the BlackSpider acquisition,'' Chief Financial Officer Simon Wilson said today in an interview. The company's research and development costs increased as SurfControl hired people for engineering and ``threat analysis.''

The shares slipped 1 penny, or 0.2 percent, to 656 pence in London. SurfControl's shares have gained 26 percent this year, giving the company a market value of 206.6 million pounds.

SurfControl, which said billings rose 24 percent to $32.6 million, agreed last week to be purchased by Websense Inc., which makes software that helps companies monitor how employees use the Web. Websense agreed to buy SurfControl for $400 million in cash.

``As a result of the announced offer the company expects to incur related exceptional costs in the fourth quarter,'' SurfControl said in a statement. ``These costs will have a material effect on the fourth quarter.''

To contact the reporter on this story: Aisha Phoenix in London at aphoenix@bloomberg.net.

To contact the editor responsible for this story: Zimri Smith at zsmith@bloomberg.net.


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