Mercury Interactive Posts 3Q Revenue GainMercury Interactive Posts 3Q Revenue Gain

Mercury Interactive Corp., a software testing and monitoring company, reported a 29% gain in revenue for its third quarter, to $126.1 million compared with $97.9 million in the year-ago quarter. But it posted a net loss of $6.7 million, or 8 cents per share, compared with a profit of $13.3 million, or 15 cents per share, for the same period a year ago, according to generally accepted accounting principles.

During the quarter ended Sept. 30, Mercury completed its acquisition of Kintana Inc. for $225 million in cash and stock, writing off $12.7 million in acquisition and R&D costs. In connection with the acquisition, Mercury is moving its headquarters from Sunnyvale, Calif., to Mountain View, Calif. It took a non-cash charge of $16.9 million to reflect the impairment of a portion of the Sunnyvale facilities. Revenue for the first three quarters was $354.4 million, an increase of 26% from $282.4 million for the same period a year ago, Mercury reported Wednesday. Deferred revenue increased by $32.1 million in the third quarter to $226 million.

"Mercury had record revenues, strong deferred revenues, and a record number of large transactions," said Amnon Landan, chairman, CEO, and president. Among third-quarter highlights, Landan said, was the fact that 46% of new product orders were purchased through term licenses, representing an acceleration of the shift to the term licensing. A record of eight transactions were over $1 million in the quarter, Landan said.

The outlook for the fourth quarter is for a further shift to term licenses for new products in range of 43% to 47% of sales. The company projects 4Q revenue will be in the range of $140 million to $148 million. The net increase in deferred revenue, reflecting term sales, will be in the range of $35 million to $45 million.

Chief operating officer Ken Klein is leaving the company at year's end to pursue outside interests. Klein has been with Mercury for 12 years and helped build it from a startup, Landan said. .