Network Associates Tops 4Q Expectations

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Network Associates Thursday posted fourth-quarter earnings that easily topped Wall Street estimates.

The security and network management vendor reported net income of $40.5 million on $241 million in sales, excluding its subsidiary, for the quarter ended Dec. 31. That compares with a loss of $127.2 million on $46.6 million in sales for the same quarter last year.

Network Associates, based here, posted pro forma earnings of 23 cents per share, surpassing First Call/Thomson Financial consensus estimates of 8 cents per share. On a consolidated basis, the company reported a loss of $3.5 million.

The vendor raised its guidance for 2002 by $60 million, forecasting revenue in the range of $860 million to $890 million, excluding

Network Associates also said it will transfer its stock listing to the New York Stock Exchange, effective Feb. 12. The move will increase the company's international visibility, executives said.

"What a great turnaround at Network Associates," said George Samenuk, Network Associates chairman and CEO, in a conference call.

"We made a lot of progress in 2001. We will make more progress in 2002 and beyond," he said.

Samenuk was appointed to replace former CEO Bill Larson a year ago and vowed to turn the troubled company around by focusing on sales execution and expansion of the company's international business. Network Associates returned to profitability in the third quarter.

Samenuk's cost-cutting measures included dissolving the company's PGP Security division. In October, he said Network Associates was looking for a buyer for its PGP desktop encryption and Gauntlet firewall product lines.

Executives said Thursday that the company has not yet sold those product lines and that the process was taking longer than they had hoped.

Gene Hodges, Network Associates president, offered some details on upcoming products, including a Sniffer enterprise manager with a Web-based console, and extension of McAfee ASaP's Rumor technology to target small businesses.

The Sniffer product line of network and application management software will reach into the small- and midsize-business market with simpler, less expensive products, he said. Also, the company plans to integrate security technologies into the Sniffer product line, Hodges said.

Shares of Network Associates closed at $26.71 Thursday, up $1.28.

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