STOCKREPORTS |
McAfee Associates, Inc. |
Nasdaq Symbol MCAF
|
| 12-JUL-97 |
Industry:
Computer (Software & Services) |
Summary: McAfee develops, markets, distributes and supports network security and management software products. |
 |
Recent Price  70.75
52 Wk Range 70.75 - 33.17 |
Yield Nil
12-Mo. P/E 65.5 |
Quantitative Evaluation:
Outlook
(1 Lowest - 5 Highest)
NA
Fair Value
NA
Risk
HIGH
Earn/Div Rank
NR
|
 |
|
Technical Evaluation:
BULLISH
since 05/97
Rel. Strength Rank
(1 Lowest - 99 Highest)
90
Insider Activity
Neutral
|
Overview 07-MAY-97
McAfee Associates provides anti-virus, network management, and help-desk support software. The company pioneered software distribution over the Internet and has grabbed 70% of unit volume shipments in anti-virus software. With a two year subscription licensing period, MCAF boasts approximately 90% recurring revenue. From its origins in virus detection, MCAF has developed and acquired technologies in network management and most recently help-desk software, with the acquisition of Vycor Corp. in March 1996. The company recently discovered UNIX and e-mail viruses and plans to offer protection from new ActiveX viruses. Revenues should continue to grow over 45% for the next two years. Gross margins are expected to narrow slightly due to a gradual shift in the sales mix away from products distributed over the Web. As a result, earnings should advance between 40-45% in 1997 and 1998.
Valuation 07-MAY-97
The shares jumped over 15% in late April as investors responded favorably to strong first quarter results that boasted a 117% rise in revenue. McAfee operates in three high-growth businesses and has gained solid market share in anti-virus software. In addition, network management software market share has grown considerably and the Vycor help-desk unit is winning large enterprise accounts. At current levels we feel that investors should add to positions, and we continue to give MCAF shares an accumulate rating. Based on our revised 1997 and 1998 earnings per share estimates of $1.50 and $2.05, respectively, the shares are trading at a discount to the company's long-term growth rate of 35-40%.
Key Stock Statistics
| S&P EPS Est. 1997 | 1.50 |
| P/E on S&P Est. 1997 | 47.2 |
| S&P EPS Est. 1998 | 2.05 |
| Dividend Rate/Share | Nil |
| Shs. outstg. (M) | 50.3 |
| Avg. daily vol. (M) | 0.978 |
|
| Tang. Bk. Value/Share |
3.05 |
| Beta |
NA |
| Shareholders |
300 |
| Market cap. (B) |
$ 3.6 |
| Inst. holdings |
93% |
|
Value of $10,000 invested 5 years ago:NA
Fiscal Year Ending Dec. 31
| Revenue (Million $) |
|
1997 |
1996 |
1995 |
1994 |
1993 |
1992 |
| Q1 |
73.36 |
33.85 |
16.52 |
5.72 |
4.06 |
2.94 |
| Q2 |
NA |
40.77 |
18.57 |
8.30 |
4.34 |
3.39 |
| Q3 |
NA |
47.29 |
25.61 |
8.71 |
4.56 |
3.56 |
| Q4 |
NA |
59.22 |
29.36 |
10.17 |
4.95 |
3.79 |
| Year |
NA |
181.1 |
90.07 |
32.90 |
17.91 |
13.68 |
|
| Earning Per Share ($) |
|
1997 |
1996 |
1995 |
1994 |
1993 |
1992 |
| Q1 |
0.37 |
0.02 |
0.07 |
-0.07 |
0.04 |
NA |
| Q2 |
E0.34 |
0.18 |
0.08 |
-0.04 |
0.05 |
NA |
| Q3 |
E0.31 |
0.24 |
0.01 |
0.06 |
0.05 |
NA |
| Q4 |
E0.48 |
0.29 |
0.14 |
0.07 |
0.05 |
NA |
| Year |
E1.50 |
0.73 |
0.30 |
0.03 |
0.18 |
0.17 |
|
| Dividend Data |
| Amount ($) |
Date Decl. |
Ex-Div. Date |
Stock of Record |
Payment Date |
| 3-for-2 |
Sep. 17 |
Oct. 18 |
Oct. 07 |
Oct. 17 '96 |
|
Business Summary 07-MAY-97
McAfee Associates (MCAF) has been one of the most effective users of the Internet as a distribution medium. Since its first day, McAfee has put its software on the Internet for free downloading. World Wide Web users can log on to the company's website and take whatever they want. After a trial period of 30 days, they are asked to pay for the software. With one of the top five most frequently visited websites on the Internet, McAfee has been able to command a hefty 70% market share for the anti-virus software. From this widespread installed base, the company has expanded its product offerings to network anti-virus software, local-area network (LAN) management tools, help desk software, and storage management software.MCAF provides industry-leading network security products for anti-virus protection as well as client/server network management tools. VirusScan, the company's flagship product, scans for known and unknown viruses prior to installation of a PC. When the scan is completed, the program becomes memory resident and protects systems from further infection.
Moving beyond virus protection for the PC, MCAF offers numerous anti-virus protection software to detect viruses over networks: NetShield provides virus protection for network file servers, Webscan scans Web browsers and e-mail systems for viruses, Bootshield provides pre-boot protection from boot-sector viruses, and ROMShield checks computers' BIOS prior to booting up a system.
The company also offers network management tools which help network administrators manage and maintain LAN resources. Products include Saber LAN Workstation (SLW), a suite product that provides software metering, hardware and software inventory, printer management, and file auditing. MCAF also sells point products separately from SLW, such as SiteMeter, SaberTools, and SiteInventory.
In April 1996, MCAF acquired Vycor Corp., a maker of client-server help desk software. Vycor Enterprise is a suite of help desk tools offering problem management, resolution and prevention. The suite provides access to trouble ticketing and knowledge bases through telephony, e-mail and Web browsers.
During the first quarter of 1997, McAfee released the latest version of its flagship anti-virus program, VirusScan 3.0, as well as GroupScan 3.0 and GroupShield 3.0 for the groupware anti-virus market. In February 1997, McAfee discovered the first macro computer virus to specifically target users of Microsoft's popular Microsoft Mail (MS-Mail) e-mail software. The virus, which is called ShareFun, searches through a user's e-mail directory and automatically generates and transmits e-mail messages with virus-infected attachments. ShareFun also infects all subsequent Word documents that are opened by the user from within Word.
Capitalization
Long Term Debt:
None (3/97).
| Per Share Data ($) |
|
1996 |
1995 |
1994 |
1993 |
1992 |
1991 |
1990 |
1989 |
1988 |
1987 |
| Tangible Bk. Val. |
3.05 |
1.31 |
0.50 |
0.49 |
0.27 |
NA |
NA |
NA |
NA |
NA |
| Cash Flow |
0.85 |
0.36 |
0.06 |
0.19 |
0.17 |
NA |
NA |
NA |
NA |
NA |
| Earnings |
0.73 |
0.30 |
0.03 |
0.18 |
0.17 |
0.09 |
NA |
NA |
NA |
NA |
| Dividends |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
NA |
NA |
NA |
NA |
| Payout Ratio |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
NA |
NA |
NA |
NA |
| Prices - High |
52 7/8 |
23 1/2 |
6 |
6 |
6 7/8 |
NA |
NA |
NA |
NA |
NA |
| - Low |
13 7/8 |
4 3/8 |
1 15/16 |
1 5/16 |
3 7/8 |
NA |
NA |
NA |
NA |
NA |
| P/E Ratio - High |
72 |
78 |
180 |
33 |
41 |
NA |
NA |
NA |
NA |
NA |
| - Low |
19 |
15 |
58 |
7 |
23 |
NA |
NA |
NA |
NA |
NA |
|
| Income Statement Analysis (Million $) |
|
1996 |
1995 |
1994 |
1993 |
1992 |
1991 |
1990 |
1989 |
1988 |
1987 |
| Revs. |
181 |
90.1 |
32.9 |
17.9 |
13.7 |
NA |
NA |
NA |
NA |
NA |
| Oper. Inc. |
73.2 |
40.0 |
2.9 |
11.7 |
10.5 |
NA |
NA |
NA |
NA |
NA |
| Depr. |
6.0 |
3.0 |
1.2 |
0.2 |
0.1 |
NA |
NA |
NA |
NA |
NA |
| Int. Exp. |
Nil |
Nil |
Nil |
Nil |
4.5 |
NA |
NA |
NA |
NA |
NA |
| Pretax Inc. |
70.7 |
26.0 |
2.3 |
12.2 |
6.1 |
NA |
NA |
NA |
NA |
NA |
| Eff. Tax Rate |
45% |
43% |
40% |
40% |
19% |
NA |
NA |
NA |
NA |
NA |
| Net Inc. |
39.0 |
14.9 |
1.4 |
7.3 |
11.1 |
NA |
NA |
NA |
NA |
NA |
|
| Balance Sheet & Other Fin. Data (Million $) |
|
1996 |
1995 |
1994 |
1993 |
1992 |
1991 |
1990 |
1989 |
1988 |
1987 |
| Cash |
127 |
55.4 |
26.5 |
27.7 |
NA |
NA |
NA |
NA |
NA |
NA |
| Curr. Assets |
164 |
90.7 |
45.2 |
37.3 |
NA |
NA |
NA |
NA |
NA |
NA |
| Total Assets |
195 |
104 |
56.0 |
39.0 |
29.0 |
NA |
NA |
NA |
NA |
NA |
| Curr. Liab. |
41.3 |
35.8 |
24.7 |
15.7 |
NA |
NA |
NA |
NA |
NA |
NA |
| LT Debt |
Nil |
Nil |
Nil |
Nil |
Nil |
NA |
NA |
NA |
NA |
NA |
| Common Eqty. |
150 |
63.5 |
23.0 |
18.3 |
10.3 |
NA |
NA |
NA |
NA |
NA |
| Total Cap. |
150 |
63.5 |
23.0 |
18.3 |
10.3 |
NA |
NA |
NA |
NA |
NA |
| Cap. Exp. |
7.2 |
1.6 |
0.7 |
0.5 |
0.2 |
NA |
NA |
NA |
NA |
NA |
| Cash Flow |
45.0 |
17.9 |
2.6 |
7.5 |
11.2 |
NA |
NA |
NA |
NA |
NA |
|
|
|
| Curr. Ratio |
3.9 |
2.5 |
1.8 |
2.4 |
NA |
NA |
NA |
NA |
NA |
NA |
| % LT Debt of Cap. |
Nil |
Nil |
Nil |
Nil |
Nil |
NA |
NA |
NA |
NA |
NA |
| % Net Inc.of Revs. |
21.5 |
16.6 |
4.2 |
40.8 |
80.9 |
NA |
NA |
NA |
NA |
NA |
| % Ret. on Assets |
26.1 |
16.8 |
2.9 |
21.5 |
64.7 |
NA |
NA |
NA |
NA |
NA |
| % Ret. on Equity |
36.6 |
30.3 |
6.7 |
51.1 |
NM |
NA |
NA |
NA |
NA |
NA |
Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.
Office--2710 Walsh Avenue, Santa Clara, CA 95051
Tel--(408) 988-3822
Website--http://www.mcafee.com
Chrmn, Pres & CEO--W. L. Larson.
VP-Fin & CFO--P. Goyal.
Investor Contact--R. T. Duryea.
VP-Secy--R. J. Schwei.
Dirs--J. Bolger, J. T. Chambers, L. G. Denend , V. Gemmell, E. L. Harper, W L . Larson.
Transfer Agent & Registrar--Chemical Trust Company of California
Incorporated--in Delaware.
Empl-- 0.
S&P Analyst: Aydin Tuncer
This report is for information purposes and should not be considered a solicitation to buy or sell any security. Neither S&P nor any other party guarantee its accuracy or make warranties regarding results from its usage. Redistribution is prohibited without written permission. Copyright © 1997