Updated from 8:09 a.m. EST
was getting clobbered Thursday afternoon, down more than 18%, after announcing that "unexpected challenges" will hurt the company's earnings and revenue picture for the rest of the year.
The vendor of Web security and anti-virus software announced financial results for the first quarter before the market opened, and said that an $18 million restructuring charge, and a drastic slowdown of business in March pushed revenue well below Wall Street's expectations for the quarter.
"In recent weeks I've met with many CEOs and CIOs who have slashed IT budgets," CEO George Samenuk said in a conference call with analysts. Consumer sales, however, were strong, he added.
But Richard Williams of Summit Analytic Partners, called the quarter a "bad miss" and said management shot itself in the foot when it pre-announced a new version of its Sniffer management software.
"Clients have no reason to buy old Sniffer if a new and improved version will be available one quarter hence -- it creates an easy excuse to defer a tough decision in a bad selling environment -- so the Sniffer sales were hurt badly in the final weeks of the quarter," Williams said. His company has no banking relationship with Network Associates.
The news hit the stock hard, and in recent trading it was off $2.46, or 18.4%, to $10.88 a share. RSA Security
, which also makes security software and reports after the close, was down far less, only 1.4% in recent trading.
Using standard accounting, the security-software maker lost $3.7 million, or 2 cents a share, compared with earnings of $15.8 million, or 10 cents a share, last year. Revenue was $215.2 million in the latest quarter, down from $220.7. The latest quarter included the restructuring charge and expenses related to the retirement of debt. Excluding those, it earned $21.2 million, or 11 cents a share. That was in line with the analyst consensus, although the sales figure fell about $13 million short.
Network Associates expects second-quarter revenue of $215 million to $220 million and pro forma earnings of 9 cents to 11 cents a share. Analysts were expecting revenue of $248 million and earnings of 17 cents.
For the full year, the company expects revenue of $930 million to $950 million and earnings of 60 cents to 65 cents per share. Analysts were expecting revenue of $1.01 billion and earnings of 74 cents.
Earlier in the month Network Associates said it will restate results for fiscal 1998, 1999 and 2000 as part of an ongoing investigation into accounting practices, including revenue recognition, at the company. As a result, the company will not file its 10K in time to meet the April 15th deadline.