McAfee set record revenues for the third quarter as the company expanded its portfolio to include endpoint, network and cloud security.
McAfee's chief executive said the company's
"outstanding" third quarter results were proof customers, partners
and employees supported the pending acquisition by Intel.
There were lower discounts, longer contracts, a higher percentage of new
customer business and lower attrition among employees during the third quarter
from July to September, said David DeWalt, Intel's chief, on a conference call
with analysts to discuss earnings on Oct. 28.
"All of this shows that the future is clearly very bright for
McAfee," said DeWalt.
McAfee had $523.3 million in third-quarter revenue, an 8 percent increase
from third-quarter 2009's $485.3 million, the company said. McAfee reported
earnings of $0.67 per share, a 9 percent increase from last year, and better
than the $0.64 expected by analysts surveyed by Thomson Reuters. Analysts were
also expecting revenues to fall between $513 million and $514 million.
According to DeWalt, the quarter results even beat McAfee's own internal
early forecast.
Intel
acquired McAfee for $7.7 billion in August. DeWalt said the acquisition is
on track and the companies are going through regulatory approvals and
"customary" closing conditions. He said the acquisition is expected
to close mid-2011.
Something doesn't match up, as Intel's Chief Financial Officer Stacy Smith
said the acquisition could "close by year end or in the first quarter of
2011," during that company's
third-quarter
earnings call on Oct. 12.
McAfee will operate as a stand-alone independent, wholly owned subsidiary of
Intel with full autonomy, said DeWalt.
"We are not moving away from our core security business of
software-based endpoint protection and network security technologies, but
instead intend to improve security for all of our customers by providing
integrated hardware and software solutions," he insisted.
Some of the quarter's biggest deals were with customers spending more on
security beyond the PC and traditional Windows security, said DeWalt. McAfee's
expansion of its security portfolio to include endpoints, the network and the
cloud was "right on point," said DeWalt.
The Network Security business, featuring technology from McAfee's 2008
acquisition of
Secure
Computing, had "double-digit" year-over-year sales growth, with
increased demand for firewall, intrusion prevention and network access control,
DeWalt said.
Jonathan Chadwich, McAfee's chief financial officer, said the boost came
primarily from the public sector.
"Our Q3 performance is clear evidence that our customers and partners
understand and support our strategy of delivering innovative, holistic security
risk management solutions and the future potential of the combination of Intel
and McAfee," DeWalt said.
DeWalt outlined McAfee's strategy on the call, discussing mobile and
embedded device security, hardware-based security, and security management and
noted that McAfee is "aligned" with the most "critical"
trends in security. Customers are looking for a "focused" security
company, more integration and a tighter relationship with partners, he said.
The top concerns are around "consumerization of IT,
cloud
security and protecting their intellectual property," according to
DeWalt.
McAfee's ePolicy Orchestrator, allowing enterprises to centrally manage
security across a range of devices using a single console, will be part of the
McAfee Security and Management Platform 5, DeWalt said. McAfee Enterprise
Mobility Management Platform 9 is based on its recent Trust Digital
acquisition, he said.
"We've created a bridge from a PC-centric world to a world where
everything is digital and everything is connected," said DeWalt, noting
that the new
McAfee
3.0 strategy looks at "ubiquitous security" that is connected to
the network and the cloud.
McAfee already offers security for virtualized environments with the
MOVE
platform for Citrix.
During the quarter, McAfee completed the acquisition of privately owned
tenCube,
the provider of the WaveSecure mobile security service that will be integrated
into the company's mobility portfolio, DeWalt said.
Chadwick said the company will continue making small and medium
acquisitions.
Addressing analysts' tablet and mobile concerns, DeWalt said there is
significant opportunity in the smartphone and tablet market, but consumers and
corporations are asking for management products to securely connect devices to
the network, not traditional antivirus for those devices. Despite recent
analyst forecasts, DeWalt said there still is "robustness" in the PC
Windows market.
Antivirus "will be a laggard, clearly, so far," until the devices
have more robust storage, but there are plenty of "leading-edge"
products and features currently available for mobile devices, said DeWalt.
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