Internet security company McAfee Inc. (MFE: 31.16 +0.25 +0.81%) has announced the worldwide availability of its new Software-as-a-Service (SaaS) Web Protection solution.The new cloud-based security solution is powered by McAfee’s Global Threat Intelligence network to ensure proactive delivery of reliable security services. Since the latest innovation will be available through the cloud, rapid deployment of the same from anywhere across the world and the cost benefits attached therewith will likely attract ready acceptance by users.
Data storage costs are ramping with expensive servers and their costly maintenance. To keep the expense under control, information technology executives have started using cloud-based facilities, thereby increasing the demand for such services. However, severe security threat is a growing concern for users, and we believe that with its proven expertise in providing Internet security, McAfee will be one of the major beneficiaries of the emerging demand for security solutions.
McAfee enjoys a leading position but faces neck-to-neck competition fromSymantec Corp. (SYMC: 14.1175 +0.1875 +1.35%). Recently, Symantec won a multi-year deal from Hewlett-Packard Co. (HPQ: 43.48 -0.82 -1.85%), defeating its largest rival McAfee. Moreover, Symantec enhanced its Norton security portfolio with the launch of “Norton Everywhere” to provide better service to handheld devices and procure new clients.
McAfee reported decent first-quarter 2010 results, with total revenue moving up 12.0% compared with the year-ago quarter, attributable to the increase in revenues across all business segments, although EPS of 41 cents remained below the Zacks Consensus Estimate of 50 cents per share. Moreover, McAfee provided encouraging second-quarter guidance.
A strong product portfolio, growth prospects in all its served markets, acquisitions, customer win momentum and good cash generation ability are positives for McAfee. However, we are slightly concerned about the intense competition that the company faces from players like Microsoft Corp. (MSFT: 23.5501 +0.2401 +1.03%), Juniper Networks Inc. (JNPR: 23.425 +0.205 +0.88%) and Symantec, as well as hardware and software manufacturers entering the IT security business.We have a short-term Hold recommendation on McAfee shares.
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