Virus scanner bug cost Trend Micro $12 million

AV vendor lowers revenue and profit forecasts

Tokyo-based antivirus software vendor Trend Micro said that a bug in its own software that affected thousands of customers has cost the company ¥903 million (NZ$12 million). The issue has also forced it to lower its revenue and profit forecasts for the April to June quarter, the company said on Thursday.

A buggy software update the company issued in April will hurt Trend Micro's operating profit and net income worst, it said in a statement.

The company reduced its operating profit forecast by just over a fifth to ¥5.5 billion, and lowered its net income forecast 16.7%, according to Naomi Ikenomoto, a spokeswoman for Trend Micro's Investor Relations Department in Tokyo.

Sales are now estimated at ¥17 billion, nearly 3% lower than previously forecast, she says.

Trend Micro's financial year runs from January to December and is reported in accordance with US Generally Accepted Accounting Principles (GAAP). The company will report its second quarter results on August 3, and does not issue yearly forecasts, Ikenomoto says.

The company hasn't lost many corporate contracts over the bug because it's difficult for enterprises to quickly change their antivirus policies, according to Ikenomoto.

"Maybe we will see some impact next year," she says.

The affair leading to the profit warning began on April 23 when the company released a faulty software update file that sucked up the processing power of PCs that had downloaded it. The file affected mainly PCs using the Windows XP operating system with Service Pack 2 and Trend Micro's OfficeScan PC-cillin Internet Security 2005 VirusBuster software, the company says.

The company quickly set up a callcentre to field enquiries, and issued updates that when uploaded automatically cleared the problem. The ¥903 million costs were largely incurred by the callcentre, which operated over weekends and through Japanese public holidays, and by advertising costs, Ikenomoto says.

The number of customer and corporate licensees affected, based mainly on data from calls to the help lines, stand at about 28,300 customers and about 700 corporate licensees, according to the company's latest estimate, she says.

Nearly all of the customers and corporate licensees were based in Japan, she says.

But the company's figures for users affected almost certainly underestimate the real number because not all of the customers who incurred problems from the faulty update contacted the emergency centre, Ikenomoto says.

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