Consumer Sales Buoy McAfee, Symantec

McAfee said Thursday that it suffered a sharp decline in profits during its third quarter, ended September 30, but reported increased revenues compared to the year-ago quarter. Santa Clara, Calif.-based McAfee attributed its declining profits to an onset of expenses, including continued costs and charges related to the September acquisition of SaaS security company MXLogic, as well as a $26.3 million stock-based compensation charge, among other expenses.

Meanwhile, security giant Symantec for its second fiscal quarter, ended October 2, reported growing earnings but shrinking revenue year-over-year. Increased consumer sales helped stave off sharper revenue declines, as sales in business segments declined, the company said.

Altogether, McAfee's income for the quarter fell 25 percent to $36.8 million, or 23 cents per share, down from $48.8 million, or 31 cents per share, in the same quarter a year ago.

Revenue for the quarter reached a record $485.3 million, representing an 18.5 percent increase over the same period last year at $409.7 million.

McAfee CEO Dave DeWalt, in a conference call with financial analysts, pointed to consumer sales as a highlight of the quarter. "This quarter I am especially proud of our consumer business, with 12.5 percent sales growth year-over-year, a number of very strategic partnerships won, an expanded product portfolio and great leadership."

McAfee's corporate business sales grew 25 percent to $308 million, helped by revenue from the November, 2008 acquisition of Secure Computing.

Among McAfee's key deals this quarter was the acquisition of SaaS e-mail and Web security company MXLogic, which expanded McAfee's cloud-based portfolio with e-mail and Web security offerings, e-mail archiving and e-mail continuity services, along with the addition of 40,000 new customers and 1,800 channel partners.

During the quarter, McAfee also formed several crucial high-profile partnerships, including an arrangement with Dell to be its exclusive default and recommended security partner for their personal computers from November, 2009 through October, 2011, with the option for a third year, in a deal that extended an exclusivity contract that ran from May, 2008 through October, 2009.

McAfee also entered alliances with Verizon Business and Adobe Systems. Under the terms of the Verizon Business deal, McAfee will use data outsourcing, consulting and managed service capabilities, while developing a suite of cloud-based managed security services. The Adobe deal will provide Adobe customers with a McAfee security scan or allow them to get a trial subscription to McAfee when they download an Adobe program or update.

Meanwhile, Symantec's income increased to $150 million, or 18 cents per share, up from $126 million, or 15 cents per share.

Revenue sank 3 percent to $1.47 billion for the quarter, down from $1.52 billion in the second quarter a year ago. Consumer sales for the quarter increased 6 percent year-over-year, while security and compliance sales declined 3 percent and storage and server management sales dropped 9 percent.

Symantec CEO Enrique Salem on Wednesday expressed that overall the company was seeing signs of improvement, especially in its consumer division.

"I am pleased with our second quarter results. We are encouraged by the signs we see of stabilization in the markets we serve. This gives us confidence that we will continue to see gradual improvements in our business over the next few quarters," Salem said in a conference call with financial analysts.