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Network Associates, Inc. (Nasdaq: NETA) lost more than half its value Wednesday, plunging 7 1/4 to 4 1/2 after warning of a fourth-quarter loss and announcing the departures of three top managers.
The Santa Clara, California-based provider of Internet security software said it expects a loss before extraordinary items for the quarter of US$130 million to $140 million, on revenue of $55 million to $65 million.
For the year as a whole, Network Associates expects to lose $84 million to $94 million before special charges, as revenue totals $742 million to $752 million.
The company, which makes the McAfee anti-virus software, said it lowered its expectations because of "the decision of key distributors to dramatically reduce their inventory levels and by a reduction in fourth quarter demand induced by a slowing overall economy."
An accounting change will account for about $120 million of the revenue shortfall, Network Associates said.
The company also said Edwin Harper, a director, has taken over as chairman, as Bill Larson will step down as chief executive officer and as a director. A search for a new CEO is underway. In addition, president Peter Watkins will leave the company at the end of the year, and chief financial officer Prabhat Goyal will leave as soon as a replacement CFO is appointed.
The news led analysts at several securities firms to lower ratings on the stock, reports said. Tucker Anthony, Chase H&Q, Pacific Crest and Adams Harkness were said to have cut ratings, and other analysts slashed earnings estimates to reflect the new outlook.
Robertson Stephens had expected the company to earn 31 cents per share on revenue of $244 million; analyst Dane Lewis is now looking for a loss of 67 cents on revenue of just $60 million.
The company plans to report results on January 25th.
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