I suppose we knew it was coming.

Last month, Secure Computing (Nasdaq: SCUR) said that first-quarter results would be far weaker than originally anticipated. Specifically:

  • Non-GAAP revenue was to come in between $65 million and $66 million.
  • Non-GAAP per-share earnings were to be $0.06 and $0.07.
  • Billings were to be $69 million.

Secure met every one of these benchmarks. Yet, as of Friday, the stock was down nearly 17%. Is that really fair? Possibly.

Here's why. Management suspended guidance for 2008 and 2009 due to uncertain economic conditions. And what they said about Q2 wasn't encouraging in the least.

Cash from operations is expected to decline from the double digits to just $3 million to $4 million, thanks to fewer federal orders and $2 million or so in cash charges for staff reductions. Billings are expected to be roughly flat. And net revenue -- get this -- is supposed to grow just 1% to 2%.

A better-than-20% grower reduced to a 2% grower. Just like that. Management is adopting sweeping cost-cutting measures -- including a modest number of layoffs -- to counteract the weakness. I guess the economy really is worse off than I thought it would be.

Or is it? Not all tech companies are suffering. Shares of Symantec (Nasdaq: SYMC) soared after the firm announced a good Q4 and strong guidance. Fellow Rule Breakers recommendation Akamai Technologies (Nasdaq: AKAM) improved its cash flow margins. And Google (Nasdaq: GOOG) is still golden.

Even so, setbacks occur in investing, and it's very possible that the weakness we're seeing with Secure Computing today will be gone in a few quarters. That's the plan, according to CFO Tim Steinkopf, who told me in an interview late last week that management thought it best to be conservative with guidance, given "worsening macroeconomic conditions."

Seems fair. I also like that he and interim CEO Dan Ryan are asking sales teams to emphasize deals where Secure has its best chance of winning. CheckPoint (NYSE: CKP), Cisco (Nasdaq: CSCO), and Blue Coat Systems (Nasdaq: BCSI) are, after all, very tough competitors.

What worries me, though, is the balance sheet. Long-term deferred revenue is down 20% since December. Short-term deferred revenue is up 20% over the same period. Steinkopf confirmed in a call with analysts last week that this indicates a shift toward shorter-term deals.

Most of that, Steinkopf said, can be traced back to customers who are conserving cash in a tight economy. He's probably right.

But I also have a nagging sense that something is chipping away at Secure's competitive advantage. Firms that have a true, defensible advantage rarely contract, even in times of economic uncertainty. That's what we have with Secure Computing right now.

Secure Computing and Akamai are Rule Breakers recommendations. Symantec is an Inside Value pick. Get, free unfettered access to the research and recommendations of either of these market-beating services free for 30 days. There's no obligation to subscribe.

Fool.com and Rule Breakers contributor Tim Beyers owned shares of Akamai and Secure Computing at the time of publication. You can find Tim's portfolio here and his latest blog entry here. The Motley Fool's disclosure policy is both safe and secure.