Network Associates Inc.s recent roller-coaster ride continued Thursday when it announced a net loss of $3.7 million for the first quarter and slashed its earnings outlook for the full year. The company now expects to see revenue of $930 million to $950 million for all of 2003, as compared with analysts expectations of $1.01 billion.
NAI delivered revenue of $215 million in the quarter, down from $220 million in the same year-ago period. The company had a net loss of $0.02 per share after earning $0.11 per share in the first quarter of 2002.
The disappointing earnings news comes close on the heels of the companys announcement that it would have to restate earnings for 1998, 1999 and 2000. NAI is also under investigation by both the Department of Justice and the Securities and Exchange Commission over the way that the company accounted for revenue in the late 1990s.
At the same time, the Santa Clara, Calif., company has continued to invest in new technologies, spending a combined $220 million in the last two weeks to acquire IntruVert Networks Inc. and Entercept Security Technologies. Both companies make intrusion-prevention products, a segment of the market that is growing quickly and gaining quite a bit of attention.
Much of the revenue shortfall is due to customers scaling back or outright canceling planned purchases in the last two weeks of March because of budget constraints, company executives said.
"This is clearly not the way we wanted to start the year and were disappointed with these results," said George Samenuk, CEO of NAI. "We expected some modest top-line revenue growth."
The one bright spot for the company was the sales of its McAfee Security consumer products. The divisions online virus-scanning service gained more than 227,000 new subscribers during the quarter, more than doubling the previous high amount for a single quarter. However, McAfees small and medium business lines did not fare as well, Samenuk said.
"McAfee enterprise results were not good. Were not happy with the revenue growth," Samenuk said.
NAI has delayed filing its annual report for 2002 because of considerations related to the government investigations. However, Samenuk said the company plans to file that report and its 10-Q for the first quarter by the end of the current quarter.
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