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Network Associates Turns a Profit

A day after winning approval for a $225 million buyout bid for majority-owned subsidiary McAfee.com, Network Associates reported net profits in the first quarter reached $15.7 million, or 10 cents per share.

The improved results bettered analysts' projections for a profit of seven cents per share in the quarter for Network Associates, the Santa Clara, Calif. firm which markets PC security software. During the same year-ago period, the company posted a net loss of $47.4 million, or 35 cents per share.

Network Associates also raised its revenue and earnings targets for fiscal year 2002, projecting revenue to come in between $875 million and $900 million, up from guidance of $860 million to $890 million provided in January this year.

The new guidance excludes revenues from McAfee and Network Associates said it would provide updated projections if and when its acqui sition of the anti-virus firm is consummated.

For the second quarter this year, Network Associates is projecting revenues of $210 million to $220 million and earnings of between 11 and 13 cents per share.

In the first quarter, the company said it generated $53 million in cash from operations, ending the quarter with cash and marketable securities totaling approximately $1 billion. Revenues jumped more than 30 percent to $220.7 million, up from $167.2 million during the same year-ago period.

"Throughout the last several quarters we have remained committed to growing Network Associates despite a constantly changing global environment and we are very pleased with the results," said George Samenuk, CEO of Network Associates.

Our focus is paying off and customers are voting with their dollars. We've made a lot of progress and are aggressively moving forward toward the billion dollar threshold and beyond."

McAfee , which reported results separately, said a growth in sales and Web-based subscriptions helped swing its fiscal first quarter earnings into the black. Excluding items, the company said pro forma profits reached $3.9 million (8 cents per share), up from last year's net loss of $1.4 million, or 3 cents a share

McAfee, which sells anti-virus and other security tools on the Internet, said revenues in the quarter jumped 46 percent to $18.8 million, up from $12.8 million. The company said its paid-subscription base bypassed the 100,000 mark with a renewal rate of approximately 80 percent for premium services.

Network Associates, which currently owns about 75 percent of McAfee, has offered 0.78 of a share of its common stock in exchange for each outstanding share of McAfee.com stock. The value of the share exchange bid is in the range of $225 million.