McAfee Sales Surge as Profit Plunges

SANTA CLARA, Calif. (TheStreet) -- McAfee(MFE Quote) saw profit slump in its third-quarter results, despite bringing in record revenue.

With demand for cybersecurity products growing, McAfee reported sales of $485.3 million, up from $409.7 million in the same period last year, and just below the $486.6 million that Wall Street had predicted.

McAfee's earnings, however, were dampened by acquisition costs and other charges, falling to 23 cents a share on net income of $36.8 million. The company, which recently spent $138 million in cash to acquire MX Logic, earned 31 cents a share on net income of $48.8 million in the prior year's quarter.

Investors were underwhelmed by the news, and McAfee's shares slumped $1.95, or 4.46%, to $41.80 in extended trading

Excluding items, McAfee earned 62 cents a share, up from 53 cents in the prior year's quarter. Analysts surveyed by Thomson Reuters had predicted earnings of 61 cents a share.

"We are pleased to report our record results for the third quarter of 2009," said McAfee CEO Dave De Walt, in a statement. "We made significant improvements across our key financial metrics."

The CEO highlighted McAfee's non-GAAP operating margin growth of 310 basis points year-over-year. McAfee's operating cash flow also grew 74% over the same period to reach $152 million, he added.

The software specialist, which was one of TheStreet's top tech picks for 2009, is clearly gaining momentum.

Speaking on a conference call after market close, De Walt explained that McAfee's international and domestic businesses both generated record revenue. Further fueling talk of a broad-based tech recovery, the CEO explained that McAfee's consumer business grew 12.5% during the third quarter.