McAfee (MFE) is expected to report Q2 earnings after market close Thursday, July 31, with a conference call scheduled for 4:30 pm ET.
The consensus estimate is 45c for EPS and $369.14M for revenue, according to First Call. The last earnings call provided Q2 guidance of 42c to 47c in EPS and revenues of $360M to $375M; also FY08 EPS guidance of $1.85 to $1.95.
Wachovia expects McAfee to report strong Q2 results ahead of consensus estimates. The firm expects little negative impact of the issues that affected the company during Q1, such as VSOE issues with SafeBoot products, where pro-forma EPS and cash flow were below expectations on higher revenue. Wachovia's channel checks continue to be positive regarding customer adoption of McAfee products, and the overall pipeline headed into 2008. Security and compliance spending is less impacted by macro economic spending concerns and McAfee is one of the beneficiaries of this trend. Wachovia believes that U.S. was solid with Europe ahead of plan -- and this bodes well for potential upside in Q1. The firm expects the enterprise business to have positive momentum driven by the Total Protection enterprise suite, SafeBoot, and the new Intrusion protection appliances. Wachovia said that one area of concern could be the consumer business but it expects the subscription and OEM model to guard against potential decline in spending by consumers. Wachovia believes McAfee remains undervalued compared to software group, and rates the shares Outperform.
Stifel said that recent checks, results from Microsoft (MSFT) and IBM (IBM), and lack of negative preannouncement activity in the space lead it to look for largely in-line quarters. Stifel expects the outlooks to be largely in-line as well. The firm believes this could set the stage for a relief rally for some software stocks as results and outlooks are not as bad as feared. McAfee is one such candidate for a relief rally, according to Stifel.