Virus scanner bug cost Trend $10.7 million

A buggy software update that affected over 28,000 Trend Micro customers has cost the company $8 million.

Tokyo-based anti-virus software vendor Trend Micro said that a bug in its own software that affected thousands of customers has cost the company YEN 903 million (AU$10.7 million). The issue has also forced it to lower its revenue and profit forecasts for the April to June quarter, the company said 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 YEN 5.5 billion, and lowered its net income forecast 16.7 percent, according to Naomi Ikenomoto, a spokeswoman for Trend Micro's Investor Relations Department in Tokyo.

Sales are now estimated at YEN 17.5 billion, nearly 3 percent lower than previously forecast, she said.

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 Aug. 3, and does not issue yearly forecasts, Ikenomoto said.

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

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

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 said.

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

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 said.

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

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 center, Ikenomoto said.

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Paul Kallender

IDG News Service
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