McAfee - Earnings Preview: McAfee
Earnings Preview: McAfee
Wednesday February 8, 3:29 pm ET
NEW YORK (AP) -- Antivirus software maker McAfee Inc. reports earnings for the fourth quarter on Thursday, Feb. 9, after market close. The following is a summary of key developments and analyst opinion related to the period.
EXPECTATIONS: On Jan. 23, the company preannounced results, and warned that it expected earnings to range between 25 cents and 27 cents per share, excluding charges, on about $254 million in revenue.
Analysts polled by Thomson Financial had expect the company to earn 38 cents per share for the fourth quarter on $274.5 million in revenue, but revised their projection to 28 cents per share on $255.2 million in revenue.
ANALYST TAKE: For the most part, analysts were unfazed by the company's projected earnings miss, and if anything, saw the stock's tumble as a buying opportunity.
Merrill Lynch analyst Edward Maguire said that the earnings miss was a "stumble" and not a "fall." Maguire lowered 2006 revenue estimates to $1.6 billion, down from $1.2 billion, and cut his price target to $31 from $38, but he noted that the company's bookings grew 14 percent year over year to $361 million.
"Though investors were rattled by the lack of Q&A following a terse call, we believe reticence reflects heightened sensitivity in light of the pending SEC settlement, rather than any intent to withhold negative color," Maguire wrote in a research note.
Bear Stearns analyst John DiFucci upgraded the stock to "Peer Perform," from "Underperform," based on its valuation, and said he was looking for more color about the consumer security market when the company announces full results on Feb. 9.
"We anticipate that the February 9 earnings call may provide additional, critical elements to evaluating the pace with which the consumer security market is evolving as well as an updated outlook on McAfee's enterprise business that may provide investors with future investment opportunities with the shares," DiFucci wrote in a research note.
QUARTER DEVELOPMENTS: Much press was given to spyware and computer viruses during the quarter. In October, a coalition of anti-spyware vendors and consumer groups published guidelines to help consumers assess products designed to combat unwanted programs that sneak onto computers.
In December, McAfee said it would provide virus scan and firewall software to subscribers of MSN's dial-up Internet service, and in November the company launched a global initiative to stop spyware.
COMPETITORS: Internet security company Symantec Corp. was bogged down by $166 million in charges related to its acquisition of software maker Veritas, and reported a third profit of $90.7 million, or 8 cents per share, down 45 percent from a profit of $163.6 million, or 22 cents per share, a year earlier. Excluding charges, the company earned 26 cents per share, just topping analysts' target of 25 cents per share.
STOCK PERFORMANCE: Shares of McAfee, which have traded between $20.35 and $33.24 over the last year, were down 14 percent for the quarter, to a closing price of $27.13 on Dec. 30.
Wednesday February 8, 3:29 pm ET
NEW YORK (AP) -- Antivirus software maker McAfee Inc. reports earnings for the fourth quarter on Thursday, Feb. 9, after market close. The following is a summary of key developments and analyst opinion related to the period.
EXPECTATIONS: On Jan. 23, the company preannounced results, and warned that it expected earnings to range between 25 cents and 27 cents per share, excluding charges, on about $254 million in revenue.
Analysts polled by Thomson Financial had expect the company to earn 38 cents per share for the fourth quarter on $274.5 million in revenue, but revised their projection to 28 cents per share on $255.2 million in revenue.
ANALYST TAKE: For the most part, analysts were unfazed by the company's projected earnings miss, and if anything, saw the stock's tumble as a buying opportunity.
Merrill Lynch analyst Edward Maguire said that the earnings miss was a "stumble" and not a "fall." Maguire lowered 2006 revenue estimates to $1.6 billion, down from $1.2 billion, and cut his price target to $31 from $38, but he noted that the company's bookings grew 14 percent year over year to $361 million.
"Though investors were rattled by the lack of Q&A following a terse call, we believe reticence reflects heightened sensitivity in light of the pending SEC settlement, rather than any intent to withhold negative color," Maguire wrote in a research note.
Bear Stearns analyst John DiFucci upgraded the stock to "Peer Perform," from "Underperform," based on its valuation, and said he was looking for more color about the consumer security market when the company announces full results on Feb. 9.
"We anticipate that the February 9 earnings call may provide additional, critical elements to evaluating the pace with which the consumer security market is evolving as well as an updated outlook on McAfee's enterprise business that may provide investors with future investment opportunities with the shares," DiFucci wrote in a research note.
QUARTER DEVELOPMENTS: Much press was given to spyware and computer viruses during the quarter. In October, a coalition of anti-spyware vendors and consumer groups published guidelines to help consumers assess products designed to combat unwanted programs that sneak onto computers.
In December, McAfee said it would provide virus scan and firewall software to subscribers of MSN's dial-up Internet service, and in November the company launched a global initiative to stop spyware.
COMPETITORS: Internet security company Symantec Corp. was bogged down by $166 million in charges related to its acquisition of software maker Veritas, and reported a third profit of $90.7 million, or 8 cents per share, down 45 percent from a profit of $163.6 million, or 22 cents per share, a year earlier. Excluding charges, the company earned 26 cents per share, just topping analysts' target of 25 cents per share.
STOCK PERFORMANCE: Shares of McAfee, which have traded between $20.35 and $33.24 over the last year, were down 14 percent for the quarter, to a closing price of $27.13 on Dec. 30.
posted at 1:45 p.m.
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