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Technology Stocks : Network Associates (NET)
NET 186.26-2.7%Nov 21 3:59 PM EST
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To: mrknowitall who wrote (4380)3/19/1999 11:31:00 AM
From: Just_Observing  Read Replies (2) of 6021
 
NETA will have a hard time closing this quarter

Apparently NETA sells each quarter as 25, 25, & 50. This quarter the second month is 2 days short so even more gets shifted into the 3rd month. When buyers see that a company is in trouble, they hold out for large discounts. I have seen this happen several times with NETA's competitors. The temptation is for NETA to give in. But this will make the next quarter worse.

During the last quarter, NETA was probably rescued by the Remote Explorer Virus scare that came with about 8 days left in the quarter. Yet their DSOs went up to 89 days from 84 days the previous quarter. They had made 240 million the Sept quarter and 272 million in the December quarter. This quarter revenue expectations are from 285 to 287 million and management guidance is for 95 days. The scary part is that the Robertson Stephens analyst expects the DSOs to come in higher than what the management has been predicting. On top of it, NETA finds itself in an upgrade cycle as new products are slated for the next quarter. All these factors will probably combine to cause NETA to miss the revenue number. If they miss the revenue number, the earnings number will miss by a much larger fraction. I hope that I am wrong but the street seems to suggest otherwise.

For reference about DSOs, please note that SYMC, who competes with NETA, has DSOs of only 34 days last quarter. Of course, SYMC's Corporate sales are only 39.3% of the total compared to around 75 - 90% for NETA (Bill Larson has not given this fraction in any of the last 4 or 5 conference calls).

If Bill Larson can pull out 285 million in revenues this quarter with DSOs of 95 days or lower, he should have his own show in Vegas.
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