McAfee profit falls 30 percent on charges, guidance disappoints; stock falls 10 pct

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McAfee rev rises, but net falls on charges

SAN FRANCISCO — McAfee Inc.’s revenue in the first quarter jumped but net income fell 30 percent from last year as the company absorbed bigger charges for restructuring and accounting for employee stock compensation and income taxes.

The computer-security software maker said its sales to consumers were strong, but that it struggled with delays in closing some larger deals. The numbers were below Wall Street’s forecasts, as was McAfee’s second-quarter guidance, sending the stock down 10 percent in after-hours trading.

McAfee said its second-quarter numbers would be dragged down somewhat by its expenses for fixing a flawed software update pushed out last week that crashed some users’ computers. McAfee has offered free subscriptions and to reimburse people who had to pay to get their computers repaired as part of the foul-up.

The results, announced after the market closed Thursday, caused McAfee’s stock price to fall $4.11, or 10.4 percent, to $35.42 in extended trading, after finishing the regular trading session down 30 cents at $39.53.

McAfee’s revenue and profit in the latest quarter were both lower than Wall Street’s forecasts.

McAfee said its net income was $37.6 million, or 23 cents per share, in the three months ended March 31, versus $53.5 million, or 34 cents per share, in the year-ago period.

Excluding one-time charges, McAfee’s profit would have been 60 cents per share. Analysts polled by Thomson Reuters were expecting 63 cents per share, on that same basis.

McAfee’s revenue rose 12 percent to $502.7 million, which the company said was a record for its first quarter. Analysts expected revenue of $513.1 million.

Dave DeWalt, McAfee’s chief executive officer, said the quarter marked McAfee’s 17th consecutive quarter of double-digit year-over-year growth, driven by strong sales to consumers. However, he said McAfee “experienced delays in the closing of certain large deals,” and had “foreign currency headwinds that were greater than we anticipated.”

The company, based in Santa Clara, Calif., offered second-quarter guidance that was also below analysts’ projections.

The company forecast net income of 58 cents per share to 62 cents per share, excluding one-time items. Analysts were predicting 66 cents per share.

McAfee said one factor weighing on the second-quarter guidance was the faulty software update, which crashed certain computers running Microsoft Corp.’s Windows operating system when legitimate code in those systems was mistakenly identified as a virus. “False positives” are fairly common in antivirus software, since some files have programming code or exhibit behaviors that are identical to viruses. The results can range from annoyances to outright system meltdown.

McAfee said its second-quarter profit would have been a penny or two per share higher were it not for the expenses associated with cleaning up the faulty update it pushed out on April 21.

On the revenue side, McAfee says it should be $500 million to $520 million in the second quarter, short of analysts’ prediction for $526 million.