Investors Cheer McAfee's Quarter

Shares of McAfee(MFE Quote) were up sharply Friday after the security software maker beat Wall Street's first-quarter estimates and raised its guidance for the full year.

In recent trading, shares were up $2.99, or 13.4%, to $25.34.

Sales to consumers drove the strong quarter, leaping by 114% to $100 million, as overall revenue increased by 7.8% to $236 million, the company announced after the close of trading on Thursday.

McAfee earned $35.9 million, or 21 cents a share, down 38% from $58 million, or 33 cents a share, in last year's first quarter, which benefited from the sale of the Magic unit and other items.

Excluding items, McAfee earned $45.6 million, or 27 cents a share. Analysts polled by Thomson First Call expected the company to post earnings of 19 cents per share on sales of $216.8 million.

McAfee expects revenue for the second quarter to be between $220 million and $230 million and earnings, before items, of 24 cents a share, at the middle of the range. The Santa Clara, Calif., company forecast 2005 revenue of $955 million to $975 million and earnings of $1.15 to $1.20 a share.

Analysts are looking for earnings of 25 cents per share on sales of $228.3 million, and $1.10 a share on revenue of $947.1 million, for the second quarter and full year, respectively.

Goldman Sachs analyst Sarah Friar called the guidance conservative in a morning research note, saying "they are setting a low hurdle that can easily be cleared even if spending were to slow, a scenario we believe is not particularly likely given the strong end-market drivers in security spending." Goldman Sachs has an investment banking relationship with McAfee.

McAfee's strong quarter was the second good performance by an antivirus software maker this week, indicating that the sector is still growing.