Network Associates to change name to McAfee
It's also selling off its Sniffer family of network management software
IDG News Service - Network Associates Inc. plans to sell off its Sniffer family of network management software and change its name to McAfee Inc. as part of an effort to cut costs and boost profitability by focusing squarely on security products and services, the company announced yesterday.
Network Associates plans to sell its Sniffer assets for $275 million in cash to Silver Lake Partners and Texas Pacific Group. The private equity firms will turn the Sniffer business into a new, stand-alone company called Network General Corp., which will continue to develop, support and market the products, according to a statement.
The companies expect the sale to close in the third quarter, subject to regulatory approvals, at which time Network Associates will change its name to McAfee. It considers McAfee to be a better known, more powerful brand than Network Associates, said George Samenuk, the company's chairman and CEO, in a conference call with media and analysts.
Network Associates also announced that it expects to report net revenue of $217 million for its first fiscal quarter, with net earnings of 32 cents per share on a GAAP (generally accepted accounting principles) basis, or 10 cents per share on a pro forma basis. The quarter ended March 31.
Analysts were expecting pro forma earnings of 11 cents per share on revenue of $212 million, according to a consensus estimate from Thomson Financial/First Call. McAfee is due to report its first-quarter results Tuesday.
The goal of the changes is to streamline the company around security products and boost operating margins to 25% by mid-2005, Samenuk said. To achieve that goal, Network Associates is also changing the architecture of its back-end systems and revamping its channel program.
The Sniffer products, which are used by businesses to manage the performance of networks and applications, hadn't been meeting targets for profit and growth, Samenuk said. They're the company's last remaining products not related to security, after it sold its Magic line of help desk and management products to BMC Software Inc. late last year.
"It's our goal to minimize as much as possible the transition issues faced by our Sniffer customers. Most of the large McAfee customers are also Sniffer customers, so we want [the new company] to be wildly successful," Samenuk said.
The Sniffer group employed between 450 and 500 people, or 15% of Network Associates' workforce, and the majority of those workers will become part of Network General, Samenuk said. The change will reduce Network Associates' revenue by about $200 million this year, he said.
"The strategic steps we are taking now will create a companythat is well positioned to capitalize on the high demand in the security business," he said.
The name change brings Network Associates full circle. Once upon a time, it was called McAfee Associates Inc. In 1997, McAfee Associates merged with Network General Corp. -- the name being given to the new Sniffer business -- and the new company became Network Associates Inc.
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