Network Associates Inc on Monday delivered the poor first-quarter numbers it had warned of earlier this month, with net income down 19.9% year-over-year at $26.2m, or $0.18 per share. The Santa Clara, California-based company also said that revenue for the second quarter would be greatly diminished as it clears out channel inventory in the face of declining sales. Revenue for the first quarter rose 8.4% to $245.2m, but was well short of original expectations.
Excluding charges for amortization of goodwill, earnings per share for the quarter were $0.30, a penny below the revised First Call consensus, which had initially been $0.48. The company blamed the shortfall on both market and internal issues, citing a slowdown in demand to due Y2K issues and longer sales cycles and difficulty in closing some sales. Other factors mentioned were a decline in the helpdesk segment of the business and longer evaluation periods for a slew of recently-launched products.
In the face of what the company calls decreased visibility into revenues for the rest of the fiscal year, it will limit channel orders in the second quarter to realign inventory levels, making them more consistent with its revised revenue expectations. The move will severely limit second quarter sales and likely leave full-year revenues significantly impaired and below last year’s level, but chief executive Bill Larson told analysts that it was a necessary one-quarter event. Larson added that the company will not lay off any staff or make cutbacks in investment, as the cash position is strong, with over $770m on the balance sheet.
