McAfee Beats Street Estimates for Q3, but Analysts Wary

McAfee posted strong third-quarter results, but market analysts remain wary about the company’s future prospects, especially in its core antivirus market.

As reported by the Associated Press, McAfee yesterday reported a preliminary adjusted profit of $58.2 million, or 36 cents per share, on $287.70 million in revenue. Analysts were expecting the company to earn 36 cents per share on $275.7 million in revenue, according to a Thomson Financial poll.

Despite the good results, most market analysts and industry pundits believe the company’s best days might be behind it — and they don’t expect McAfee to surpass expectations again in the near future.

Said Jeffries analyst Katherine Egbert:

The beat was an encouraging sign and brought some welcome relief from recent negative news regarding stock options and management turnover. . . .The persistence of weakening long-term fundamentals in consumer antivirus, an uncertain margin trend, and the ongoing stock option review are all significant risks.

Egbert also noted strong competition from Microsoft and Symantec.

McAfee’s stock-option review already has claimed the company’s chairman and CEO George Samenuk and its president Kevin Weiss. Before and since the executive shuffle, McAfee has been rumored to be an acquisition target.

Other market analysts, including AG Edwards’ Kevin Buttigieg and Morgan Keegan’s Chris Hovis, were similarly skeptical of McAfee’s ability to experience continued prosperity, with Hovis noting the company’s "muted" fourth-quarter guidance.

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