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

To: Don Earl who wrote (5949)	12/29/2000 8:27:02 AM
From: Elephant	Read Replies (2) \| Respond to of 6021

The value of NETA It's almost impossible to see how NETA could be as low as the current price level for more than another 30-60 days. Here's why. 1) NETA will sell at least $200m of product next quarter. The channel is clean on the books now, and most of the selling for that $200m has already been done. 2) $4.85 just in net cash value ($800m in cash and equivalents, minus long term debt, divided by $140m shares outstanding). 3) NETA holds 80% of MCAF, which is a stand-alone business that could be sold off. Current value: about $2 per NETA share. 4) Anti-virus business unit generating about $500m/yr in revenues. Would be a good acquisition candidate (the business unit, not necessarily the whole of NETA). Value: SYMC is valued at about 3x TTM revenues. Value of NETA's A/V would be about $1.5b in the right hands, or about $10/sh. Potential suitors should include: CA, SYMC, TMIC, BMCS, or SAP. 5) Sniffer business unit generating about $200-250m/yr. Tough to value properly (perhaps someone else could come up with a comparable). Using 3x revenue, this unit has a value of $4/sh. Possible suitors would be: HWP, CSCO, INTC, and others. 6) Other businesses (PGP and Firewall, help desk, intrusion detection, ...) are additional upside. Each of them has a list of potential suitors, including: ISSC, RNBO, CHKP, and so on. Bottom line: This company is ripe to be plucked, disassembled, and sold off. The value of the parts is at least $21/sh using comparable ratios of other companies (ie: ones with real management teams). Using a 50% discount factor, someone should make an attempt to acquire the company at $10.5/sh, then sell off the parts. It's not often that an opportunity like this comes along, so it should be acted upon fairly soon. If shareholders become confident in the new management team (whenever they arrive), this opportunity will evaporate. We all know that Billy Boy has been the problem since 1997, and that competitors with more-or-less equivalent products have out-executed him over the last 3 years. These same companies are now looking for ways to make next year's growth numbers. NETA, or at least some of its parts, could provide the ticket. -E