- The Washington Times - Monday, September 15, 2003

This story incorrectly reported the net income of Steelcloud Inc. during the third quarters of 2002 and 2003. The company reported net income of $10, 308 during the third quarter of 2003, compared with $101,172 a year earlier.

A recent string of computer worms and viruses and a partnership with a top software firm have boosted shares of SteelCloud Inc. over the past three months.

The Sterling, Va.-based Internet security company announced last week that its revenues for the third-quarter rose to $8.2 million from $6.4 million during the same quarter of 2002.

Share prices rose 16 cents, or 3.1 percent, to close at 5.36, a 52-week high on the Nasdaq Stock Market.

Much of the share increases have come since June, when SteelCloud announced a partnership with Computer Associates, an Islandia, N.Y., company specializing in corporate computer software.

The company said it would soon make the first shipments of its SC2 corporate security appliance, which it will use in conjunction with Computer Associates’ eTrust software.

SteelCloud will need revenue from the Computer Associates’ partnership to recoup a big third-quarter drop in net income as a result of costs associated with setting up the partnership.

Total net income fell from $101 million during the third quarter of 2002 to $10.1 million in the third quarter of 2003.

“Looking forward, the Computer Associates relationship could lead to higher margins,” said Craig Walters, an analyst with Ferris Baker Watts who does not own shares.

By partnering with Computer Associates, SteelCloud will become a larger player in a market dominated by three major companies: Network Associates, Symantec and TrendMicro.

Share prices for most Internet security firms have risen since a wave of viruses and worms hit computer networks last month.

Analysts said SteelCloud is well-positioned to be a big player in the Internet security market, which grew from $1.7 billion to $2.2 billion in 2002, according to International Data Corp., a technology market research firm.

SteelCloud pulled in about $2.9 million of its $8.2 million in revenues as part of a subcontract with Lockheed Martin of Bethesda to supply special computer servers to the U.S. Postal Service.

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