Network Associates To Restate Earnings, Calls Off Takeover

Santa Clara, Calif.-based Network Associates did not release details of the problems, except to say they were found during a routine preparation of an amended tax filing and are under review by the company's audit committee to determine the magnitude of the inaccuracies.

In a statement, the company said there is no evidence that earnings reports for 2001 and the first quarter of 2002 will have to be restated.

Network Associates said it has informed the Securities and Exchange Commission and will keep regulators informed of the internal probe.

Shares of Network Associates fell $5.13, or more than 20 percent, to $18.62 in morning trading on the New York Stock Exchange. Shares of McAfee were down $4.76, or more than 25 percent, to $13.78 in trading on the Nasdaq Stock Market.

Since the collapse of Enron, investors have been spooked by reports of accounting inaccuracies.

Because of the uncertainty, Network Associates executives decided to withdraw the $224 million offer for McAfee, which was spun off three years ago. It already controls 75 percent of McAfee.

The deal announced April 10 was a sweetened offer after McAfee's board rejected Network Associate's first bid.

Copyright © 2002 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.