Updated from 10:22 a.m. EDT

Shares of Network Associates ( NET) were being clobbered Wednesday after the security-software maker offered second-quarter guidance late Tuesday that was far short of analyst expectations.

Network Associates shares were recently down $2, or 11.1%, at $16.10.

Analysts were divided over the performance of the management, which has had to restate results from a previous team and has posted negative surprises in the past. "We recognize that it's difficult to give Network Associates the benefit of the doubt given management's turbulent track record," wrote Piper Jaffray senior research analyst Gene Munster.

"That said, we expect some positive catalysts in the coming quarters, including the June 3 analyst day -- clarity on full-year expectations -- and operating margin improvements" in fiscal 2005, he added. "While it could take several quarters to see improvements from the restructuring, we believe improvements will emerge." (Munster has a market-perform rating on Network Associates and his firm hasn't done banking with the company.)

By contrast, Fulcrum's Alan Weinfeld maintained a buy rating for investors with a holding period of at least six months and praised management. "The current management team has delivered financial results with strong expense controls in each of the last 13 quarters they have been in the company," he wrote. Weinfeld also pointed to strength in the company's consumer business, and noted the company may buy back more shares. (His firm hasn't done banking with Network Associates.)

After the close Tuesday, Network Associates said it expects second-quarter revenue to range from $200 million to $205 million and pro forma earnings to range from 4 cents to 6 cents a share. That's far short of the consensus estimate gathered by Thomson First Call, which pegged revenue at $224.5 million and earnings at 15 cents a share in the second quarter. But at least some of those estimates likely did not account for the $275 million sale of Network Associates' Sniffer business, announced Friday.

The Sniffer sale will be dilutive in 2004, because Network Associates will lose about $200 million in annual revenue but will not be able to reduce expenses as quickly. That's because Network Associates will continue to support Sniffer customers who are also McAfee customers during a transition period.

The company will offer revised guidance for calendar 2004 to reflect the Sniffer sale at its analyst day June 3.

Under generally accepted accounting principles, Network Associates reported first-quarter net income of $56 million, or 32 cents a share. That compared with net income of $12.5 million, or 8 cents a share, in the same period a year earlier.

Excluding charges, Network Associates said it earned pro forma net income of $18.1 million, or 10 cents a share, in the first quarter, compared with pro forma net income of $23.8 million, or 13 cents a share, a year earlier.

Revenue slipped 1.2% from a year ago to $216.6 million.

The first-quarter results came in line with Network Associates' preannouncement Friday. Also Friday, Network Associates said it will change its name to McAfee, after its antivirus software, when the Sniffer sale goes through later this year.

One source of strength for Network Associates was its consumer business, which different analysts described as "going gangbusters" and "growing like the plague." The consumer business contributed 20% of overall revenue, showing 65% year-over-year growth and bookings growth of 115% to 120%. The McAfee online business netted 860,000 new subscribers, reaching a total of 4.5 million.

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