McAfee Shares Surge on Robust Sales

"Security spending remains a priority for customers," said McAfee CEO Dave DeWalt in a conference call Thursday. "[Security software] is a technology must-have."

McAfee executives added on the conference call that an economic slowdown typically results in an upsurge in malicious activity, particularly identity theft. McAfee is one of the tech companies that is expected to benefit from the upheaval in the financial sector.

DeWalt also attributed the company's third-quarter performance to the recent expansion of its sales force, as well as enhancements to the company's reseller strategy.

Despite strong revenue growth, McAfee's profit dipped to just under $49 million, or 31 cents a share, compared to $63.4 million, or 39 cents a share, in the same period last year. The results, however, were affected by a $12 million impairment charge related to the credit crisis.

Excluding charges, McAfee reported third quarter profit of $82.2 million, or 53 cents a share, up from $72.4 million, or 44 cents a share, a year ago. Analysts had estimated earnings of 49 cents a share.

"McAfee reported strong 3Q08 results squashing concerns that arose following Symantec's quarter and subdued outlook," wrote Todd Weller, infrastructure software analyst at Stiefel Nicolaus, in a note released Friday.

Weller reiterated his "buy" rating and $40 McAfee price target. The analyst added that McAfee's "stronger execution" is helping gain market share from Symantec and other security rivals such as Microsoft (MSFT Quote).