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Technology Stocks : Network Associates (NET)

NET 201.36

+2.1%

3:57 PM EST

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To: Chuzzlewit who wrote (2329)	4/6/1998 6:05:00 PM
From: Mike V.	of 6021

I believe NETA will achieve their EPS this quarter. I believe they will achieve their EPS goal because they "Stuffed" a ton of inventory into their channel partners at the end of the quarter. I wonder how Tech Data and Ingram Micro will feel at the end of Q2 when they still have the inventory? Bill just fired (on Monday April 6th) a large portion of the Total Network Visibility group (Network General, NGC). Bill, what did you get when you paid a BILLION PLUS for NGC. NGC brought 4 major assets to the McAfee marriage. 1. Sniffer 2. CyberCop security detection 3. Software performance tools; SLM, RouterPM etc 4. The NGC field organization Let's look at each components of NGC: According to industry analysts the Sniffer market is growing at 15% per year. The original Sniffer product is arguably the most successful network management tool in the industry and there is no reason to think this will change. CyberCop presents a different set of problems. This product is based on technology licensed from the Wheel Group. In addition, the CyberCop product line is the basis for the NETA advertising campaign, "Who's watching your network?" In February 1998, the Wheel Group was acquired by Cisco. I have been told that Cisco will not renew the Wheel Group license next year. Will Bill knowingly sell a product that has a 1-year life? The NGC software products were developed in Beaverton OR and Nashua NH. Monday April 6th was a bad day for both organizations as EVERYONE IN BOTH GROUPS WAS FIRED. Again I ask the question, how long will Bill sell products, SLM and RouterPM etc, that will never be enhanced. NETA has stated in their SEC filings that a key objective for the merged companies is to develop a sales team capable of selling "solutions" and not just products to large end users. The McAfee sales force is primarily a telephone sales team. They are very aggressive with their anti-virus products but lack the polish and experience to sell "solutions". The old NGC sales force has the contacts at corporate sites to pitch "solutions" however a large number of them have resigned. More importantly, NGC had a very strong field technical pre-sales organization; before all of the resignations. These technical pre-sales specialists are critical for direct and channel sales. If NETA has to re-stock the field sales and support organizations then the probability of earnings miss-step increases. Now I know that most of the people on this thread feel Bill can do just about anything, but at the rate he is firing people and others are resigning from this "can't miss" company I suggest that the people that work at NETA feel the future is in doubt.

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