NAI Optimistic Despite Earnings Shortfall

Network Associates' Q2 earnings of $1.1 million were well below last year's $21.2 million, thanks in part to a charge related to a pair of acquisitions.

Network Associates Inc. on Wednesday reported earnings of $1.1 million, or $0.01 per share, as the company continues to reshape itself and recover from a financial scandal.

The results represent a substantial decline from the same period last year, when NAI earned $21.2 million, or $0.14 per share, on revenue of $232.9 million. Revenue for the second quarter of 2003 was $216.6 million.

NAI, based in Santa Clara, Calif., forecasts third-quarter earnings to be between $0.10 and $0.12 per share on revenue of $220 million to $225 million.

The company said it took a charge of $18.9 million related to its acquisitions of IntruVert Networks Inc. and Entercept Security Technologies and some subsequent layoffs.

Despite the earnings drop-off, company officials were optimistic about NAIs financial future.

"We are confident these earnings indicate that were continuing to gain share on a user basis," said CEO George Samenuk. "Our consumer business continues to grow."

NAI officials said the company is still planning to file with the Securities and Exchange Commission its delayed 10-K for 2002 by the end of September. The filing was put off as a result of the companys decision to restate earnings for 1998-2000 due to the fallout from investigations into its accounting practices in those years. Both the SEC and the Department of Justice are looking into the companys practices.

The investigations have also resulted in the companys former corporate controller, Terry Davis, pleading guilty to securities fraud. The SEC also has filed a civil complaint against Davis, who left NAI in February 2002.