Shares in Network Associates Inc fell 22% Thursday on fears that security software giant will fall short of first-quarter expectations. The stock lost $8.875 to close at $32.25 after BancBoston Robertson Stephens analyst John Powers voiced concern over sales in the first part of the quarter and downgraded the stock from strong buy to buy. It seems the root of the company’s problems may be its heavy acquisition activity, which has left some customers holding onto their money until some of newly- acquired technologies and products are integrated into the company’s suites.
In all, NAI shares have fallen just over 50% since the beginning of the year, taking about $4bn in market cap down with them. Another factor taking the shares down is the company’s ongoing discussions with the Securities and Exchange Commission about how it may account for in-process research and development connected to the acquisitions. Many companies have had to restate past results in light of new guidelines from the SEC and in January, NAI warned that earnings could be reduced by $0.02 to $0.03 a share if the SEC forces it to change some of its previously- booked write-offs. Analysts surveyed by First Call are expecting the company to post earnings of $0.49 per share for the first quarter. á
