Earnings Preview: McAfee

| About: McAfee Inc. (MFE)

McAfee (MFE) is expected to report Q4 earnings after the market close on Thursday, February 11, with a conference call scheduled for 4:30 pm ET.

Guidance

The consensus estimate is 64c for EPS and $514.81M for revenue, according to First Call. Guidance provided by management on the last earnings call was for Q4 EPS of 61c-65c, on revenue of $505M-$525M.

Analyst Views

Deutsche Bank is expecting Q4 revenues of $512M and EPS of 63c, slightly below consensus. The firm anticipates EPS upside from a solid quarter. Deutsche Bank's recent checks indicate that McAfee saw solid momentum in Q4. Moreover, recent results of other security vendors also point to a strong Q4 quarter for the industry. The firms checks within the industry also indicate that security is a top priority for CIOs. The consumer business should benefit from an improving PC market, while Deutsche expects an improved macro benefiting the enterprise business. The firm anticipates consumer revenue of $189M and corporate revenue of $323M. The potential renewal of the Symantec (NASDAQ:SYMC)/ Hewlett-Packard (NYSE:HPQ) deal is still unclear and may represent a short-term concern for McAfee. With an estimated 27M consumer PCs sold over the last 12 months, vs. 13M for Dell (NASDAQ:DELL), Deutsche believes this potential deal is significant. That said, with over 50% penetration with existing OEM relationships, the firm thinks McAfee does not need to pursue this deal aggressively. On the call, investors should try to examine the cash flow dynamics of OEM relationships, traction of new products and large deal momentum. Deutsche finds McAfee's valuation attractive, and expects the company benefit from an improving IT spending environment. The firm rates MacAfee a Buy, with a $48 price target.

On the conference call look for updates on the recently announced collaboration with Facebook and the establishment of a new wholly-owned subsidiary in China. Consensus estimates for Q1/FY10 are: 63c/$507.34M and $2.70/$2.12B, respectively.