Earnings Miss: SafeNet misses; CFO gone; nCipher deal dead

SafeNet just pre-announced an earnings miss after the market closed today. Worst case (as they pre-announce anyway) they'll be off by 10% on the top line. This will still be about 5% year over year growth.

But, that's not the interesting aspect of the announcement. SafeNet has thrown the CFO under the bus. He's out immediately. They also mention additional costs of $800k for Sarbanes-Oxley and $600k for the nCipher deal will cause an undetermined earnings miss as well.

So, this guy couldn't get Sarbanes under control and couldn't close the nCipher deal, so he's gone. And as he leaves, it seems the CEO is making a thinly veiled personal attack. Get a load of this, pulled directly from the release:

"SafeNet's Chairman and CEO commented, "SafeNet has, for many years, been a company that has been marked by consistent execution of its business plans highlighted by strong growth in revenue and profit, good cash flow and careful accounting and reporting. We are making these changes in our leadership structure so that we can better focus appropriate skills on critical business areas. We will run the business with passion, focus and discipline and concentrate on improving accounting and financial reporting, accelerating sales growth and streamlined business operations."

What is that about? This seems to be pretty strange behavior. I'm not a big fan of this kind of hand waving. If you are the CEO, first of all - at least have the decency to put your name in the release. It's nowhere to be found. Secondly, accept responsibility. Ultimately, whatever happened from a sales standpoint and an accounting standpoint has been under your watch, no? If the company has had a lack of "passion, focus and discipline," whose fault is that?

From the perspective of a guy who's been shown to the door more than once (what can I say? My former bosses either loved me or ... not so much), show the guy some respect on the way out. Unless there is some type of malfeasance, keep your dirty laundry inside. No one wants to see it. Maybe I'm overreacting to this, but something about the way the release was worded rubs me the wrong way. It reads like a mob execution - vindictive and with no class.

If you are a SafeNet customer, do you worry? Probably not, though as with Websense and Entrust - if they miss again next quarter, it's a problem. But more importantly, if you are nCipher, is this the kind of partner you want? Guess that's something their Board of Directors will need to figure out.

UPDATE: Per this release, SafeNet has killed the nCipher deal. Claiming the additional UK regulatory review will take too much time and cost too much money. So, I guess nCipher is single again and the regulators can hang the head of another dead deal in their great room.