NETA ($12-$14-$13) Smaller loss,Forecasts rising sales over next two quarters.
Thursday July 19, 9:56 pm Eastern Time
Network Associates Q2 loss smaller than expected
(UPDATE: Adds details, byline, updates throughout, previous SANTA CLARA, Calif.)
By Elinor Mills Abreu
LOS ANGELES, July 19 (Reuters) - Computer security vendor Network Associates Inc. (NasdaqNM:NETA - news) on Thursday reported a smaller second-quarter loss than Wall Street had expected and pledged to turn its first profit in a year in the current quarter by focusing on overseas markets and tight cost controls.
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The company forecast rising sales over the coming two quarters and analysts credited a new management team with engineering a major turnaround amid a sector-wide slump for technology companies.
Shares in Network Associates, which have rallied by 170 percent so far this year, rose to $12.20 in after-hours trade on Instinet, up from $11.29 at the Nasdaq close on Thursday.
Excluding charges, Network Associates posted a second-quarter loss of $2.7 million, or 2 cents per share, slightly better than Wall Street estimates.
Including one-time charges, the parent company's net loss was $37.1 million, or 27 cents per share for the quarter ended June 30 on revenue of $181.5 million.
After a year of losses, the company should be profitable or break even in the current quarter, George Samenuk, president, chairman and chief executive officer, said during a conference call.
``International business was not going well at Network Associates last year or the year before,'' said Samenuk, who joined the Santa Clara, Calif.-based firm six months ago.
But ``good old-fashioned sales execution has led to 15 percent sequential growth (internationally) at a time when competitors are losing steam,'' he said.
The company forecast revenue of between $185 million and $195 million with per-share earnings between breakeven and 3 cents per share.
For the fourth quarter, the company forecast revenue between $225 million and $245 million and earnings of 5 cents to 8 cents per share.
Israel Hernandez of Lehman Brothers credited both Samenuk and Chief Financial Officer Steve Richards, who was hired about three months ago, with the company's success.
``They still have a lot of work to do, but so far I think the Street likes what it sees,'' Hernandez said. ``We're very pleased given the carnage we've seen elsewhere. It's refreshing to see someone do well.''
Bob Lam of Bear Stearns concurred. ``They're on a very solid road to recovery,'' he said.
Samenuk said the company's ``Sniffer'' network management and monitoring software did surprisingly well at a time when customers are looking for ways to improve the reliability of their networks rather than install new hardware.
``In essence, it's hitting our sweet spot,'' he said. ``Before the trend was to put in new stuff. Now the trend is to put in Sniffers.''
The company's McAfee antivirus software and services unit contributed over 50 percent of revenues, Chief Financial Officer Steve Richards said.
Subsidiary McAfee.com, the company's consumer-oriented online anti-virus operation, contributed $14.4 million to parent revenues, Richards said.
Analysts had expected the company to report a loss of 6 cents per share, excluding charges and excluding McAfee.com results, with forecasts ranging from a loss of 3 cents per share to a loss of 9 cents per share.
Network Associates markets software for encryption, antivirus software, and provides network analysis software and services. |
