(RTTNews) - Tuesday, business software and services provider Blue Coat Systems, Inc. (BCSI: News ), reported a swing to profit in the second quarter, primarily on a decline in operating expenses. Earnings for the quarter, as well as revenues came in ahead of Street estimates. Looking ahead, Blue Coat has forecast strong earnings for the third quarter in line with analysts' expectations.

On a GAAP basis, Blue Coat Systems reported a second quarter net income of $8.4 million or $0.19 per share, compared with net loss of $0.3 million, or $0.01 per share, in the second quarter of fiscal 2009.

On a non-GAAP basis, net income for the quarter was $13.1 million or $0.29 per share, compared with non-GAAP net income of $11.6 million, or $0.27 per share in the second quarter a year-ago.

On average, sixteen analysts polled by Thomson Reuters expected the company to earn $0.26 per share for the quarter. Analysts' estimates typically exclude special items.

The Sunnyvale, California-based company's total net revenue for the second quarter increased 1% to $120.4 million from $119.0 million in the second quarter of the year-ago period. Fourteen Wall Street analysts estimated a revenue of $120.11 million for the quarter.

Segment-wise, Product revenue for the quarter declined to $76.50 million from $84.79 million a year-ago, while Service revenue rose to $43.93 million from $34.22 million last year.
Cost of Blue Coat's product revenue declined to $19.26 million from $25.12 million year-ago, but the cost of its service revenue increased slightly to $12.94 million from $12.07 million in the year-ago period.

The quarter saw a decline in the company's total operating expenses with marketing expenses increasing marginally to $45.60 million from $44.95 million year-ago. Research and development expenses declined to $19.56 million from $20.17 million in the prior year quarter. General and administrative expenses declined to $11.17 million from $13.28 million in the similar quarter last year.

Brian NeSmith, president and chief executive officer, Blue Coat Systems said, "In the quarter, we experienced solid sequential revenue growth in North America and in Europe. We saw strong demand in both the U.S. Federal and enterprise segments of our business for Application Delivery Network solutions, which help contain network and bandwidth costs, enhance business productivity, and mitigate exposure to evolving threat environments."

The company ended the quarter on October 31 with cash, cash equivalents, and restricted cash of $142.5 million, an increase of $19.8 million from the prior quarter. Cash flow provided by operations in the second quarter of fiscal 2010 was $18.2 million.

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