Updated from 1:01 p.m. EST

Two leading makers of Internet-security software turned in results last night that looked similarly solid. But while shares of

Symantec

(SYMC) - Get Report

rallied on Thursday, a closer look at the numbers triggered a selloff of

McAfee.com

(MCAF)

.

Symantec and McAfee both reported earnings after the bell Wednesday that beat analysts' expectations. The companies also raised their guidance for the coming quarters.

But after an initial pop, McAfee shares pulled back as investors took note of the fourth-quarter decline in subscriber growth. McAfee ended down $9.21, or 28.5%, to $23.08.

The company collected 125,000 subscribers in the latest quarter, which was down from 200,000 in the third quarter, when major viruses, such as Nimda and Code Red, sparked demand.

McAfee.com knew it wouldn't be able to repeat the third quarter, which was a record in terms of new subscribers for the company. "Except for the third quarter abnormality, our subscriber growth was relatively consistent in 2001," said Srivats Sampath, chief executive of McAfee.com. The company added 140,000 subscribers in the first quarter and 100,000 in the second quarter.

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Nevertheless, analysts were concerned about a pricing change that allowed more of McAfee's revenue to be recognized upfront. The company wouldn't have met revenue estimates, analysts said, without a $1.6 million favorable impact from the pricing change.

"As investors dig a little deeper into the numbers, the stock could continue to pull back," Sterling Auty, an analyst at J.P. Morgan, said in a research note this morning. He also raised concerns about the stock's valuation. "We continue to believe, despite the recent selloff, shares of McAfee.com are richly valued."

McAfee.com, which lets consumers secure and upgrade their PCs through subscriptions to its Web site, posted fourth-quarter earnings, excluding items, of $4.2 million, or 9 cents a share. Including charges, the company earned $904,000, or 2 cents a share.

Revenue rose to $18.6 million, up 54% from $12.1 million in the same period last year. For 2002, McAfee expects to earn 25 cents to 28 cents a share on revenue of $80 million to $90 million. Analysts were calling for a profit of 22 cents and a top line of $84 million.

Demand for computer virus protection grew in the past quarter as high-profile viruses attacked consumer and corporate networks. Businesses also found themselves confronting a relatively new fear, so-called "cyberterrorism," in the final months of the year. After the Sept. 11 suicide hijackings, hysteria built as national news outfits tried to pinpoint how terrorists could cause more mass distress. According to some reports, many businesses weren't prepared to fend off malicious attacks on their computer systems.

Symantec and McAfee.com, along with

Network Associates

(NETA)

(McAfee's parent company), produce software that's designed to prevent other users from disrupting a computer or a network.

For its part, Network Associates beat analysts' estimates after the close Thursday. In the latest fourth quarter, the company earned $40.5 million, or 23 cents a share, excluding items, easily topping the consensus forecast. Including items, the company lost 2 cents. Network Associates also raised its revenue guidance for 2002 and said it expects to exceed earnings estimates for the year.

Symantec's results didn't seem to raise any red flags in Thursday trading, and its shares rose $8.40, or 12.6%, to $75.35. In the latest quarter, Symantec's consumer business saw revenue jump 20% from the same period a year ago. The company, which sells security software to individuals and enterprises, said third-quarter earnings before one-time charges and other items totaled $59.4 million, or 78 cents a share, topping analysts' expectations for 64 cents. Factoring in the items, the company broke even. Symantec said quarterly revenue rose to $290.2 million from $241.8 million in the same period a year ago.

The company also forecast earnings of 66 cents to 74 cents a share and revenue between $285 million and $295 million, excluding special items, in the fourth quarter. In the year-ago period, the company earned 62 cents a share, excluding items, with revenue of $250.6 million. For 2002, Symantec projected earnings before items of $2.44 to $2.52 a share and revenue of $1.045 billion to $1.055 billion.

Israel Hernandez, an analyst at Lehman Brothers, wrote in a research note that he was "encouraged" by the strength of Symantec's third-quarter results, especially in light of the difficulties facing the economy. He upgraded the stock to buy from market perform, setting a price target of $85 for 2002.