Websense (NASDAQ: WBSN) suffered a beating on January 31, dropping a whooping 25% in market value. I see no reason for the drop other than an overreaction by the market. The only good news I see out of that is that it brings Websense's valuation more in line.
Websense's results were actually fine, no matter how one looks at it, especially given then difficult market environment.

Now the reason for the drop: The market was surprised by the end of Websense's tax-loss carryforwards and the company also announced it expects to earn $0.13-$0.14 per share in its first quarter. Analysts were expecting $0.14. I should warn here though for anyone interested in Websense, that while in my view it remains a worthy buy, any buyer should have their mind set on the long term and also expect a fair bit of volatility.

Websense's Results:

• Revenues for Q4 rose 54% to $17.4, while yearly revenues jumped a full 70% to $61 million.

• Net income increased to $6.5 million for the quarter from $1.6 million in Q4 previous year.

Websense has no debt and generates lots of cash and with a net profit margin of 27% and ROE of 4.4%--small but way above its peers, it looks good to me.

Next up...What do I see when I see Home Depot.

sheguno@yahoo.com