Network Associates 3Q Shows Improvement, More Cost Cuts Planned
October 11, 2001 6:18 PM ET
An upbeat George Samenuk, CEO of Network Associates, said the company enjoyed a solid third quarter and outlined further cost-cutting measures aimed at improving profitability.
For the period ended Sept. 30, Network Associates reported pro forma earnings, excluding the McAfee.com business and other charges, of $8.5 million, or 5 cents per share, well above the guidance provided of between break-even and 3 cents per share.
Excluding McAfee.com, revenue was $193 million. Total revenue was $209 million, while the overall loss came in at $11.3 million, or 8 cents per share.
"Our business was very, very strong in the third quarter," Samenuk said, in a conference call to discuss the results. "I'm pleased to report that in the midst of economic turmoil, our company made [its projections]. Network Associates is back."
In addition, Samenuk outlined several measures the company plans to take in order to reduce expenses further.
Among the changes, Network Associates said it plans to look for a buyer for its PGP desktop encryption and Gauntlet firewall product lines. That will result in the elimination of about 250 positions, with another 150 employees expected to move into other business units, the company said.
In addition, the PGP VPN, PGPfire for corporate users and the PGP E-Business Server will be branded and sold as McAfee, Samenuk said. After the corporate changes, Network Associates will be focused on three business units: McAfee, Sniffer and Magic, he said.
Overall, the company expects to save $50 million over the next year, as a result of these actions and plans a restructuring charge of between $9 million and $11 million in the fourth quarter.
Looking ahead, Network Associates reduced its revenue projections for the fourth quarter to between $200 million and $215 million, down from between $225 million and $245 million. However, due to the cost-cutting moves, the company is now projecting a pro forma profit of between 7 cents and 10 cents per share. That compares to previous guidance of between 5 cents and 11 cents per share.
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