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Technology Stocks : Network Associates (NET)
NET 202.39-0.1%Dec 26 9:30 AM EST
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To: Chuzzlewit who wrote (2106)3/13/1998 3:57:00 PM
From: Bulldozer  Read Replies (1) of 6021
 
Paul - as a frequent poster on the SDTI thread and an investor in both NETA and SDTI, I would be interested in your opinion on the growth prospects for NETA. You state you would sell if you saw "emerging issues that compromised the underlying growth potential of the company."

In 1997, 84% of sales were generated by the anti-virus and network analysis products. Both maturing segments (although Larson does state the server side still has plenty of upside). He acquires TISX which starts to round out his product suite but still brings in a commodity business (firewall unit growth expected to grow by 90% CAGR but revenue growth only 26% CAGR)and PGP, a company that pales in comparison to RSA.

NETA does have a diverse sales channel - retail, Internet, OEM, telesales, Sys int, VARS and large direct, and a nice recurring revenue (subscription) model - and of course Bill's BIG mouth (Just once I'd like to see him issue a press release that focuses soley on the company without slamming competitors and unashamedly comparing themselves to bluechips like MSFT or CSCO).

They are positioned well in their markets and can certainly grow in line with security software growth. But the underlying growth issues are probably why the stock is trading at a discount to other security vendors at only 28 times '98 and 22 times '99 eps. Your thoughts?

Bulldozer
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