Network Associates Inc posted the poor second-quarter results it had warned of last time, with a net loss of $195.8m on revenue that plunged 89.9% year-over-year to $25.2m. Results for the quarter included various one-time items totaling $13.7m and an incremental reserve to cover potential channel payment defaults, net of which the loss amounted to $1.05 per share, matching the First Call consensus. Net loss for the year-ago period was $38.5m, or $0.29 per share.
The Santa Clara, California-based network security and utilities software house had warned a few months ago that second-quarter revenues would be severely impacted as it moved to clear out channel inventory in the face of declining sales. The company has blamed flagging sales on both market and internal issues, citing a slowdown in demand due to Y2K issues, longer sales cycles and difficulty in closing some sales. A decline in the helpdesk segment of the business and longer evaluation periods for recently-launched products also contributed to the slide.
As a result of these issues, the company said it would limit channel orders in the second quarter to realign inventory levels, making them more consistent with its revised revenue expectations. The move will almost certainly leave full-year revenues below last year’s level, but chief executive Bill Larson told analysts in April that it was a necessary one-quarter event.
Six-month net loss was $169.5m on revenue down 43.1% at $270.4m, against a loss of $5.8m last year. Results include various one- time charges of $28.8m and $88.9m for the current and year-ago periods, respectively.