newstoc.com

  • Loading stock data...
15th May 2022

We provide solutions and information for all business needs...

McAfee Reported Strong Earnings. Why Its Stock Is Sliding.

Text size

McAfee is selling its enterprise-software arm.


David Paul Morris/Bloomberg


McAfee

shares are trading sharply lower despite strong first quarter results from the provider of consumer-focused computer-security software. The pending spinoff of the company’s enterprise-security business makes the numbers a little difficult to parse, and some investors are disappointed with its guidance.

In March, McAfee (Ticker: MCFE) announced a deal to sell its enterprise software arm to the private-equity firm Symphony Technology Group for $4 billion in cash. On Wednesday, the company presented March quarter financial results that treat the enterprise business as a discontinued operation.

On that basis, the company had revenue of $442 million for its fiscal first quarter, ended March 27. The total was up 25% from a year earlier, with net income from continuing operations of 16 cents a share. The company reported adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, of $199 million.

Including the enterprise business that is being sold, revenue was $773 million, up 13%, and profits were 18 cents a share.

For the June quarter, McAfee projects revenue from continuing operations of $430 million to $434 million, with adjusted Ebitda of $161 million to $165 million, including $40 million to $45 million in “stranded costs” as a result of the disposal of the enterprise business. Stranded costs are expenses relating to the business being sold that will linger for a time even after the transaction.

For the full year, McAfee sees revenue from continuing operations of $1.77 billion to $1.79 billion, with adjusted Ebitda of $693 million to $703 million, including $150 milloin of stranded costs.

“McAfee achieved significant increases in revenue, subscribers, profitability and cash flow to start Fiscal 2021,” McAfee CEO
Peter Leav
said in a statement. He added that the company added 885,000 net new direct-to-consumer subscribers in the quarter. 

UBS analyst Fatima Boolani said in a research note that net additions were the second-highest in nine quarters, underscoring broad-based growth in users across geographies and sales channels that was aided by a strong PC market.

She says the first-quarter results were better than she had expected. But she also noted that the second-quarter guidance was lower than anticipated, and that McAfee increased its full year forecast by less than the margin of the first-quarter beat. “We foresee investor consternation,” she writes. Boolani nonetheless keeps her Buy rating on the stock, and lifts her target to $27, from $25. 

McAfee shares are down 9.8%, to $21.74.

Write to editors@barrons.com

2021-05-05 17:09:00


www.barrons.com


#McAfee #Reported #Strong #Earnings #Stock #Sliding

By admin

newstoc.com