Network Associates Inc. (NYSE: NET) is returning to its roots, but the company's shareholders may be a bit stumped.
While reporting increased profits for its first fiscal quarter, the company missed analysts' expectations and disappointed with its second-quarter predictions. Shares of Network Associates fell $0.19 (1.04%) to $18.10 on the news in trading on Tuesday.
Last week the company said it will sell its Sniffer network management business to Silver Lake Partners and Texas Pacific Group for $275 million in cash. The purchasers will launch a standalone entity called Network General to pursue development of the product (see Network Associates Sells Sniffer). After that bit is complete, Network Associates will rename itself McAfee (now its security division) and focus on selling computer security products.
The restructuring is widely seen as positive, but, as shown by the company's first-quarter earnings report yesterday, it will go through some pains during the transformation.
On a GAAP basis, the company reported a profit of $56 million, or 32 cents a diluted share, on revenues of $217 million for the quarter. Its pro forma profit was $18 million, or 10 cents a share, and lower than the 11 cents a share analysts were expecting.
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