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Technology Stocks : Network Associates (NET) -- Ignore unavailable to you. Want to Upgrade?

To: Chuzzlewit who wrote (5704)	8/18/1999 9:44:00 AM
From: Edwarda	Read Replies (2) \| Respond to of 6021

However, as a parting shot, let me say with respect to your prediction: However, since the company will not be burning cash for the quarter ... I don't think so ... Note that I did not look for a resurgence of cash generation, merely that I do not expect the kind of cash burn that we saw in the second quarter.

To: Chuzzlewit who wrote (5704)	9/24/1999 3:25:00 PM
From: AlienTech	Read Replies (1) \| Respond to of 6021

Never said these gusy were stupid when it comes to making a buck for themselves! On June 30, Network Associates reported net revenue of $25 million for the second quarter -- down 90% from $249 million in the same period a year ago. Receivables for the quarter were down 24% from Q4 of 1998 but still stood at $199.4 million. If you annualize the company's Q2 revenue to determine days sales outstanding (DSO), you might not believe your eyes. DSO, a measure of how long it takes on average to convert receivables into cash, stood at 720 days. This means it takes the company about two years to collect the money it's owed by customers. By many measures it shouldn't take longer than one quarter. Worse yet, the company has all but admitted it won't be able to collect most of the above accounts. At the end of Q2, doubtful accounts were $153 million, or 77%, of the $199 million outstanding. Network Associates' balance sheet problems have been well reported, so where is all this leading? The company has been footing the bill for its McAfee.com division, including a national marketing campaign launched in July, since it created the division last December. The company doesn't break out the cost of the division in its financial report, but since shareholders have had to eat those losses, news of an IPO should help clear the plate. It's one less expense Network Associates has to wrangle. fool.com Before rushing off to subscribe for the IPO, investors should understand that McAfee.com is an untested business in a new market. In its latest quarterly report, Network Associates says McAfee.com will incur significant losses for the foreseeable future, and it outlines a number of business risks. For example, no one knows if customers will even be willing to pay for subscription-based products. Buyer beware.