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McAfee (MFE) is expected to report Q2 earnings after the market close on Thursday, July 30, with a conference call scheduled for 4:30 pm ET.

Guidance

The consensus estimate is 57c for EPS and $466.87M for revenue, according to First Call. Guidance provided by management on its last earning call is for Q2 EPS of 54c-58c and revenues of $455M-$475M.

Analyst Views

Jefferies forecast is for operating margin of 24.8% vs management guidance of 23%-25%, and a consensus of 24.3%. The firms higher-end margin expectation reflects good expense control and cost synergies from the Secure Computing acquisition. The firm has modeled GAAP billings of $1.25B and GAAP deferred revenue of $434M. Including the non-GAAP effect of Secure Computing, these metrics would each move up by $38.5M. Jefferies expects the Corporate Security segment to deliver another solid quarter of growth. Jefferies modeled corporate revenue of $299M, above consensus at $294M. The firms checks suggest that McAfee has continued to benefit, even through the current Sept quarter, from U.S federal initiatives on cybersecurity.

Meanwhile, Consumer revenue should continue to reap the benefits of the earlier PC OEM efforts, although slow PC sales could crimp upside. For Consumer, Jefferies forecasts revenue of $171M, compared to consensus of $173M. Lastly, Jefferies believes McAfee's next large PC OEM renewal is not until the December quarter, creating potentially two more quarters of unencumbered cash flow (June and September). The firm modeled operating cash flow to be $113M for Q2, compared to the Street's expectations of $100M. Recall that on July 16, Deutsche Bank recommended McAfee and rival Symantec (NASDAQ:SYMC) as derivative plays on the upcoming Microsoft (NASDAQ:MSFT) Windows 7 launch. The firm expects both stocks to outperform over the near-term and keeps Buy ratings on both. Also, McAfee's shares at the end of June, rallied to its highest level in 10 years amid speculation the company will be acquired. Bloomberg has reported on June 29, that investors have begun to speculate a larger company may acquire McAfee, citing comments at the time from Pacific Crest analyst Rob Owen.

Source: Earnings Preview: McAfee