Despite Strong Q4, McAfee Plans Layoffs

McAfee Thursday reported increased earnings in the fourth quarter, but said it anticipates conducting layoffs and consolidating facilities as it aims to cut costs amid the worsening recession.

A significant part of company sales were driven by its endpoint protection product Total Protection, or ToPs, which grew 11 percent. Sales of data protection grew more than 70 percent year-over-year, while risk and compliance sales grew 60 percent year-over-year.

Altogether, McAfee's revenue increased 19 percent from the fourth quarter of 2007 to $424 million. Executives at Santa Clara, Calif.-based McAfee hailed the company's 12th consecutive quarter of year-over-year double digit growth as well as its fourth consecutive quarter of increased market share.

McAfee's fourth quarter income also soared 273 percent to $45 million, up from $12.2 million during the fourth quarter of 2007, in part due to its acquisition of network security company Secure Computing, finalized in November 2008.

McAfee's fourth quarter highlights included closing four acquisitions, including Secure Computing. It also launched new technologies that included Artemis "in-the-cloud" protection and more than doubled its consumer distribution, with a year-over-year increase of 127 percent for trial subscriptions. The company also touted the highest overall addition of online net new subscribers in more than 11 quarters.

"McAfee has come a long way and 2008 was a transformative year during which we invested in our business to drive future growth and had an opportunity to enhance sales and productivity," McAfee CEO Dave DeWalt said on the company's fourth quarter earnings call.

However, despite strong growth, McAfee execs said that they anticipate having to further "improve cost efficiencies" with personnel reductions and facility consolidations. Company execs said they will continue to impose travel restrictions, hiring freezes to keep the headcount flat, mandatory time off, salary freezes, and suspension of certain compensation benefits. In addition, McAfee plans include a 50 percent consolidation of Secure Computing's back office resources, and closing more than two-thirds of Secure's facilities following the acquisition.

"This is a time for McAfee to grow and take market share," DeWalt said. "We believe we have the financial resources, the team, the product leadership, the go-to-market strategy, the partner ecosystem and the global brand to compete effectively and win."