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UPDATE 1-AuthenTec's shares surge on key customer win

* Key customer likely HP: analyst

* Co sees Q2 rev above Street

(Recasts; adds analyst’s comments)

BANGALORE, May 13 (Reuters) - Shares of AuthenTec Inc AUTH.O shot up 42 percent Thursday, a day after the security software maker forecast second-quarter revenue above estimates and said it had regained a key customer.

AuthenTec, which makes smart sensors and identity management software, said it got a “significant design win with a leading PC OEM for 2011” and hopes to return to profitability early next year.

"We believe the key customer is likely Hewlett-Packard HPQ.N," Capstone Investments analyst Jeff Schreiner said in a note this morning.

“The loss of HP previous sent shares falling where they have remained ever since,” he noted.

The recapture of HP-based revenue significantly alters future prospects for AuthenTec, Schreiner said upgrading the stock to “buy” from “hold.”

HP was a major AuthenTec customer during FY’07-FY’08, likely equalling about 20 percent of total revenues, he noted.

AuthenTec forecast second-quarter revenue of $10.4 million to $11.4 million. Analysts polled by Thomson Reuters I/B/E/S were looking for $10 million. [ID:nASA00CWO]

AuthenTec’s first-quarter net loss was almost flat at $4.7 million, or 16 cents per share.

Revenue for the quarter rose 30 percent to $9.2 million.

Smart sensor business revenue was up 17 percent at $8.2 million.

The year-on-year revenue growth in smart sensors was driven by increased sales of both PC and wireless products, reflecting improved economic conditions, the company said.

Excluding items, the company posted a net loss of 8 cents per share.

Analysts had projected a loss of 8 cents on revenue of $8.6 million.

Shares of the company were trading up 34 percent at $3.21 in morning trade on Nasdaq. They touched a 17-month high of $3.49 earlier in the session. (Reporting by Mansi Dutta in Bangalore; Editing by Unnikrishnan Nair and Don Sebastian)

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