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

To: appro who wrote (3402)	10/20/1998 6:11:00 PM
From: Wigglesworth	Respond to of 6021

Network Associates Gets Boost From Plans to Slow Expansion By LISA BRANSTEN THE WALL STREET JOURNAL INTERACTIVE EDITION SAN FRANCISCO -- Strong quarterly results and a promise to slow its torrid acquisition pace helped send shares of Network Associates higher Tuesday. Shares of the Santa Clara, Calif., company were up 2 1/16, or 6% to 36 15/16 on the Nasdaq Stock Market. Meanwhile, the Nasdaq Composite Index was up 6 40 to 1655.10, while Morgan Stanley's high-tech 35 index was down 1.80 to 576.30. Jump to a roundup of individual tech stocks, or join a discussion about tech stocks volatility or Internet-stock mania. * * * Heard on the Net: Online Investors See Solid Profit for IBM Late Monday, the company reported a net loss of $132.1 million, or 99 cents a share, reversing a year-ago net profit of $11.5 million, or nine cents a share. Excluding a $189 million charge associated with acquisitions, Network Associates earned 41 cents a share in the latest period, up from 27 cents a year ago. The mean estimate of analysts surveyed by First Call was for earnings of 38 cents. Through a series of acquisitions, Network Associates has evolved over the last year into a company that offers a large number of antivirus and network-management software products. In July, the company closed an acquisition of Dr. Solomon's Group, a British antivirus software company, for about $640 million and in August it completed the acquisition of CyberMedia, a personal-computer software-management company, for which it paid about $130 million. Network Associate's stock has been troubled of late in part because analysts were worried that the company might be hurt by the rapid pace of acquisitions and speculation on Wall Street that the company was using very aggressive accounting techniques for the acquisitions, according to Paul Saunders, an analyst at SoundView Technology Group. He has a "strong buy" rating on the stock and isn't concerned about the accounting methods. But he said that in order to allay accounting fears the company needs several consecutive quarters of strong earnings growth -- without big write-offs. Mr. Saunders attributed Tuesday's gains to investor relief that the company appears prepared to take it slow for several quarters, and a realization that the shares were very cheap, relative to past highs. As of Monday's close, shares of Network Associates were at about 16.5 times estimated 1999 earnings, according to First Call. Mr. Saunders believes the shares should go to the low-50s over the next year. Paul Dravis, an analyst at NationsBanc Montgomery Securities Inc., believes the shares will rise to 63 -- or 30 times his 1999 earnings estimate of about $2.10. He agreed with Mr. Saunders that the slowdown in growth should be good for the company because it should allow management to fully digest new operations and then focus on product development, sales and marketing. Bob Lam, an analyst at Bear Stearns & Co., said that one of the benefits of holding off on acquisitions should be that the strong growth he expects will be more apparent as Network Associates can more easily make "apples to apples" comparisons with earlier quarters. Makers of large-scale enterprise software products such as PeopleSoft and SAP may continue to suffer because of the global economic slowdown, he said. But Network Associates should do comparatively better because the average cost of their products is so much lower -- and because the network-management products can help customers defer spending on hardware.