McAfee Misses Sales, Profit Targets in 1Q
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McAfee capped off what's has already been one of the worst weeks in the security software company's history by reporting first-quarter sales and earnings that fell well short of analysts' estimates.
Not surprisingly, McAfee (NYSE: MFE) shares were punished in after-hours trading, falling $3.78 a share, or 10 percent, to $35.75 after closing off $0.39 a share to $39.53 ahead of the flagging earnings report.
In the quarter, McAfee posted a profit, including one-time charges, of $37.6 million, or $0.23 a share, on sales of $502 milliondown from a profit of $53.5 million, or $0.34 a share, in the year-ago quarter.
The $502 million in sales was well below the consensus target of $513 million, according to analysts surveyed by Thomson Reuters.
Excluding one-time charges, the world's second-largest security software firm posted a profit of $96.4 million, or $0.60 a share, also well below not only the consensus forecast of $0.63 a share but significantly less than the benchmark target company officials set for themselves at the conclusion of the fourth quarter.
Company officials tried their best to spin the lackluster quarterly results while shareholders were logging in to their online brokerage accounts to dump the stock.
"In the first quarter, we were especially pleased with our record consumer business performance which has been an area of strategic investment for us," CEO Dave DeWalt said in a statement.
However, DeWalt said, the first-quarter results were hampered by a number of factors including "delays in the closing of certain large deals," sluggish growth in the midmarket segment and "foreign currency headwinds that were greater than we anticipated."
"Looking ahead, we believe that the diversification of our business model and the breadth of our portfolio of security solutions strongly positions us in the security marketplace," DeWalt added.
The fiscal meltdown comes almost exactly one week after McAfee created one of themost embarrassing technical gaffes in its history when a botched virus definition file update crashed hundreds of thousands of PCs around the world and sent customers into full rage mode.
The faulty signature update file mistakenly flagged the critical SVCHOSE.EXE file for Windows XP SP3 as a threat and quarantined it, causing machines running XP to shut down every 60 seconds.
McAfee and its investors will have to wait until Friday morning for analysts to respond to the disturbing combination of both shoddy quality assurance of its products and, now, an almost inexplicable earnings miss just a few months after executives assured Wall Street that everything was fine.
Last 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.
Archrival Symantec (NASDAQ: SYMC) meanwhile made some news of its own Thursday, picking up encryption software firms PGP and GuardianEdge in deals valued at a combined $370 million.
For now, 23 of the 30 analysts tracking McAfee's stock maintain either a "buy" or "strong buy" recommendation.