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

To: Kenny who wrote (4088)	1/25/1999 11:12:00 AM
From: AlienTech	Read Replies (1) \| Respond to of 6021

Network Associates Moving (NASDAQ: NETA) January 22, 1999 by Kevin Prigel -------------------------------------------------------------------------------- Network Associates has taken a beating over the past few days with the compounding a few major drivers. The drivers for the recent fall include: Fear that the SEC investigation of Network Associates accounting policies will force out certain members of management. Fears that a change in accounting policies by the SEC would impact current and future earnings. Intel's announcement that they will incorporate encryption features into their next generation chips. Management held a conference call last night to address these concerns. It appears that each of the above drivers is not a negative drag on the long-term performance of Network Associates, and that they should continue to deliver excellent performance. Last night management reiterated their statement that no members of management will leave the company. It appears that the facts support this statement. With most of the original management team still in place I do not believe they will be leaving soon. The current SEC investigation pertains to accounting for research and development write-offs. Management believes that the issue will at most effect earnings by $0.02-$0.03 per quarter, and could be offset by positive business results without any effect on current consensus estimate. Intel's announcement that they will incorporate encryption technologies on their next generation chips is only a minor setback to the Network Associates story. The company's suite of products serves many more functions than simple encryption. In fact their only encryption product is PGP which provides little revenue, and is generally distributed freely. The incorporation of encryption functions may raise the general awareness of security problems, and increase the perceived need for security management software for home users (a potentially massive market). It also looks like Microsoft will finally push Windows NT 2000 out the door this year. With the release of this next generation OS much of the UNIX market is expected to switch to NT. This will be a boon for Network Associates, whose products focus on the Windows environment. After Microsoft's blowout earnings announcement I anticipate a similar release from NETA. In that announcement investors will see the blossoming of the Network Associates story and jump on to a possible gorilla. streetadvisor.com