Why Websense Shares Got Knocked Senseless

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of cybersecurity specialist Websense (NAS: WBSN) are down about 11% today after missing the Street's EPS estimates. Forward guidance also appears underwhelming, as top-line projections for the full year represent a slight decline from trailing-12-month revenue (not counting the most recent quarter).

So what: Websense's third quarter revenue of $90.4 million was down from $92.1 million in the year-ago quarter, but slightly ahead of the analyst consensus of $89.1 million. However, non-GAAP EPS results of $0.43, which came in ahead of the $0.39 in consensus expectations, weren't what Wall Street focused on today. Full-year projections are essentially flat, with $359.8 million to $361.8 million coming in below the earlier trailing-12-month result of $364.2 million.

Now what: This is a pretty mediocre report, with barely any positive momentum offered for the upcoming quarter. CEO Gene Hodges sounded an optimistic note by pointing out double-digit sales growth to new customers and a rebound in international sales, but that apparent momentum isn't reflected in the company's forward guidance. Websense has already lost about a third of its value this year, and until investors see real evidence of growth, there's little reason to expect that trend to reverse.

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The article Why Websense Shares Got Knocked Senseless originally appeared on Fool.com.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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