Needham keeps its hold rating on SonicWall (SNWL ).
Analyst Joseph Craigen says second-quarter EPS and revenue were below his estimates. He says the primary reason for teh shortfall was related to $1 million in product that shipped in the second quarter but was hung up in deferred revenue as the company tried to reduce the number of distributors. SonicWall now has 34 distributors, and is aiming for a reduction to 12.
He says distributor changes are only half complete, and he's not comfortable that these problems are firmly behind the company, and remains cautious. Also, he says second-quarter expenses were a few hundred thousand dollars higher than he expected. He raised the 12 cents 2004 EPS estimate to 13 cents, and upped the 14 cents 2005 estimate to 17 cents.