Strong 4Q Lifts McAfee Shares
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While most tech stocks slid on Friday, shares of security software maker McAfee managed to gain ground after the company posted solid fourth-quarter earnings and offering up a descent outlook for 2010.
McAfee (NYSE: MFE) shares rallied up $2.03 a share, or 5 percent, to $39.92 in Friday trading.
In its fourth quarter, McAfee posted a profit of $0.64 a share, excluding one-time charges, in line with most analysts' estimates, on sales of $525.7 million.
The $525.7 million in sales represented an impressive 24 percent jump from the year-ago quarter. Including one-time expenses, the Santa Clara, Calif.-based company earned $54.5 million, or $0.34 a share, up from $45.4 million, or $0.29 a share, in the same period last year.
For the year, McAfee pocketed $173.4 million, or $1.09 a share, on sales of $1.9 billion.
"Amid challenging global economic conditions, our 2009 performance is a testament to the power of our business model, strength of our team and ongoing solid demand for comprehensive security solutions," CEO Dave DeWalt said in a statement.
"Looking ahead, a strong operational foundation and leading product portfolio has McAfee well positioned for continued market share gains and future success as a leading global security provider," he added.
Investors were further emboldened by a first-quarter forecast of earnings between $0.60 and $0.64 a share on sales of between $500 million and $520, a sign that the company is likely to exceed the consensus estimate of $507 million in the quarter.
McAfee's chief rival, Symantec (NASDAQ: SYMC), wasn't as fortunate as its shed $0.48 a share, or 3 percent, to $16.75 Friday after Jefferies and Co. analyst Katherine Egbert downgraded the stock from a "buy" to a "hold."
In a research note, Egbert predicted McAfee appears to be poised to steal away a five-year, $200 million-a-year contract to provide antivirus applications for HP (NYSE: HPQ) PCs. She also cut her 12-month price target on Symantec from $20 a share to $18.
"Because McAfee has a lower operating margin for its consumer division than Symantec does, they can offer more attractive terms to HP," she said in the research note, adding that the contract is up for renewal starting in January 2011.
Regardless, both of the preeminent security software vendors figure to do quite well in 2010 as consumers and large corporations contend with what seems a never-ending onslaught of new cyber attacks.
A McAfee study released this month found that 54 percent of enterprise customers surveyed said their companies had already suffered a large-scale attack or stealthy infiltration from organized criminal gangs, terrorists or nation-states and expect more of the same throughout 2010.
Earlier this month, McAfee unveiled new servicing packages for small and midsized businesses that offer implementation assistance, user training, maintenance and optimization features for companies that can't afford to allocate the same amount of manpower and IT security resources as their enterprise brethren.
McAfee is rated either a "buy" or "strong buy" by 24 of the 31 Wall Street analysts providing coverage for the stock.