1/22/99 issue of San Jose Mercury News
"Accounting probe dogs
Network Associates"
sjmercury.com
Can't post the entire article here, but here's the last portion.
"Calling from England, Larson came out swinging against all the rumors
that have been circulating about the company. No, Chief Financial
Officer Prabhat K. Goyal is not leaving. Yes, North American sales
chief James Flatley has resigned, but only because new worldwide
sales head Joanne Evans, formerly an Oracle Corp. (Nasdaq,
ORCL) sales executive, wants someone else in the job.
Furthermore, says Larson, in tolerating the SEC's scrutiny, Network
Associates finds itself in the ''good company'' of firms like @Home
Corp. (Nasdaq, ATHM), America Online Inc. (NYSE, AOL),
Excite Inc. (Nasdaq, XCIT) and Motorola Inc. (NYSE, MOT), all
of which have had to restate earnings.
And a goody: Later this year, Network Associates will conduct an
initial public offering of shares in its ''portal,'' McAfee.com, which
Larson says has 14 million paid subscribers and 15 million unique
visitors per month.
Says Larson: ''We think this is a unique, undervalued asset.''
Network Associates watchers reacted predictably to Larson's
presentation, with short sellers saying they've heard it all before and
Larson's ''astute'' portfolio managers praising his skills.
''All they've ever done is beat estimates and delivered on promises,''
says Storm Boswick of J.&W. Seligman & Co. in New York, which
owns more than 4.6 million Network Associates shares. ''Not only is
(the criticism) wrong, but it's a damn shame.''
Rumors aren't the only reason the company's stock is declining. The
SEC check-up calls into question the quality of its earnings. And the
company can't say for sure when the investigation will wrap up or if it
will be extended to include 1997 acquisitions.
But it won't matter what one thinks of Bill Larson or the in-process
R&D debate if investors heed his call to ''put it all on the balance
sheet and just ignore it.''
Investors so far have been fickle. They punished companies like
software maker Citrix Systems Inc. (Nasdaq, CTXS) but left
virtually unscathed @Home and Veritas Software Corp. (Nasdaq,
VRTS), which are recording large amortization expenses.
It's dangerous to suggest that long-established accounting rules don't
matter. But if investors buy Larson's line, the debate over merger
accounting will be over." |
