McAfee Outstrips 1Q Expectations

Pointing to the positive impact of last year's restructuring and divestures, McAfee executives said Thursday that first-quarter results exceeded their expectations.

Revenue for the quarter ended March 31 rose 7.7 percent, to $236 million, compared with $219.1 million one year earlier.

New revenue, excluding the Magic and Sniffer businesses sold in 2004 and the McAfee Research division sold last month, grew 36 percent.

First-quarter net income fell 38 percent, to $36 million, compared with $58 million in the first quarter last year. Operating costs for the quarter included a loss of approximately $46 million from the disposal of assets and technology.

George Samenuk, chairman and CEO of Santa Clara, Calif.-based McAfee, told financial analysts that his management team's streamlining efforts were beginning to bear fruit. "From an operational perspective, I could not be more pleased," he said.

During the quarter, Samenuk said bookings increased 26 percent and operating margins came in at 24 percent, a significant improvement. When McAfee divested the Sniffer line slightly more than a year ago, the company pledged to produce operating margins of 25 percent by the middle of this year.

McAfee's consumer business, in particular, exceeded Samenuk's projections, growing 114 percent to $100 million for the first quarter.

Enterprise-related sales were $73 million. North America contributed 48 percent of corporate bookings, up 41 percent, he said.

On the call, McAfee executives told analysts to expect revenue of between $220 million and $230 million for the second quarter, a growth rate of 22 percent excluding divested businesses. For the year, the company raised its revenue guidance to between $955 million and $975 million.