Online Services Swell McAfee

The security software company beats first-quarter revenue and profit estimates.

Author:: Katie Dean
Publish date:: Apr 27, 2006 6:08 PM EDT

Updated from 5:02 p.m. EDT

McAfee

(MFE)

stifled any perception of softness in the security market this quarter when it posted first-quarter earnings and revenue that plowed past analyst predictions on the strength of strong sales from its online services consumer division.

The positive report had after-hours traders bidding up the stock $1.14, close to 5%, to $25.72.

For the first quarter, McAfee earned $40.9 million, or 25 cents a share, up from $36 million, or 21 cents a share, in the year-ago quarter.

Excluding certain items, McAfee earned $61.5 million, or 37 cents a share, up from $45.6 million, or 27 cents a share in the first quarter of 2005. On that basis, the security software company blew past consensus expectations of 30 cents a share.

On the top line, McAfee brought in $272 million, up from $235.7 million in the same quarter a year ago and handily beating consensus of $262.2 million.

Overall, McAfee consumer revenue in the quarter grew by 20% year over year to $112 million, with bookings increasing by 20%. Revenue from the online consumer services in the quarter grew by 30% year over year.

The online consumer services added 1.9 million net new subscribers in the quarter, bringing the total number of unique subscribers to 19.2 million.

Bookings increased 13% globally and were up in all geographic regions.

For the current, or second, quarter, McAfee forecast revenue between $260 million and $280 million and non-GAAP earnings in the range of 27 cents to 32 cents a share.

The Thomson First Call forecast for McAfee averages sales of $268.6 million, and EPS of 31 cents.

For the full year 2006, the company projects between $1.05 billion and $1.15 billion on the top line, and earnings of $1.25 to $1.40 a share. Consensus pegs the company to bring in $1.1 billion and $1.28 a share.

During a conference call with analysts after the bell, the company touted its April acquisition of Web security company

SiteAdvisor

, a year-old company founded by a group of MIT engineers.

McAfee CEO George Samenuk said the company will help McAfee have a better relationship with its customers, adding that "saying we're thrilled about

the technology is an understatement."

CFO Eric Brown said that McAfee's board had also approved $250 million for share repurchases through October 25, 2007.

Shares closed the regular session up 43 cents, or 1.8%, to $24.58.