Updated from 2:04 p.m. EDT

Network Associates

(NET) - Get Report

has extended the deadline of its offer to acquire spinoff

McAfee.com

(MCAF)

. The extension came after only 4% of the McAfee shares not already owned by Network Associates were tendered by investors.

Santa Clara, Calif.-based Network Associates, which already owns 75% of McAfee shares, said in a press release Tuesday that it would extend its offer until midnight Aug. 13 from Monday at midnight. The offer is contingent on a majority of those McAfee shares not already owned by Network Associates being tendered. That condition was not met by the deadline.

"With approximately 4% of shares tendered, our stockholders agree with our board of directors -- the Network Associates offer was financially inadequate and substantially undervalued both our current business and future potential," said McAfee president and CEO Srivats Sampath. "We call upon Network Associates either to increase its offer to a level that the board of directors of McAfee.com can support or to promptly terminate and withdraw its offer so that both companies can move forward and focus on building value for our respective stockholders."

After abandoning an earlier offer following accounting troubles and disclosure of an investigation by the

Securities and Exchange Commission

, Network Associates on July 1 offered 0.90 of a share of its stock for each outstanding share of McAfee. But as stock prices plummeted, so did the value of the deal.

Shares of Network Associates have dropped 30.9% since July 1, while McAfee stock has fallen only 3.8%. Based on Monday's closing prices, Network Associates would be buying McAfee shares at a discount of $2.13, or 16.3%. Shares of Network Associates fell 57 cents, or 4.7%, to $11.61 in recent trading. McAfee shares were up 11 cents, or 0.8%, at $13.90.

"First of all, we want to find out who those 4% of people are who tendered their stock. They have to be the dumbest people on earth," said Needham & Co. analyst Richard Davis, who has a buy rating on McAfee. "There are plenty of ways to lose money in the market. This is probably not a way."

Davis said he believes by extending the deadline, Network Associates may be hoping its stock price climbs to increase the value of the offer or may be buying time to sweeten the deal. "Absolutely Network Associates has to raise the bid," said Davis, who would like to see a premium of 5% to 10%.

Kent Roberts, executive VP and general counsel for Network Associates, said Network Associates believes more time will help sort out its stock price, which the company believes is undervalued, and help McAfee shareholders better evaluate the fundamentals of Network Associates.

Network Associates spun off McAfee.com in 1999 during the dot-com boom to sell its virus software via the Internet. "Theoretically Network Associates could say, 'Look, the only reason you're alive is because of us, so you have to take this bid,'" Davis said. Such guerrilla tactics, however, would be a "recipe for a lot of hard feelings if not phone calls to the lawyers," he added.

Given its majority ownership, Network Associates could bring the acquisition to a vote of McAfee shareholders, akin to the vote by the boards of

Hewlett Packard

(HPQ) - Get Report

and

Compaq

on their merger.

Under that scenario, "we would have to have the boards agree

to bring the issue to a vote and because of our high percentage ownership in McAfee.com, there would be a more elaborate test," Roberts said. "It would be quite possible, but more difficult."

Hostile takeovers also can be structured as tender offers like Network Associates' latest offer. But "we don't view this as hostile," Roberts said. Rather, he said, Network Associates tried to make it as "non-coercive" as possible by requiring a majority of shareholders excluding Network Associates to tender their shares and also requiring that Network Associates owns at least 90% of outstanding McAfee shares after the offer is completed, Roberts added.