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Network Associates reports Q1 loss

Network Associates said it lost $3.7m (£2.4m) in the first quarter of 2003, after earning $15.7m (£10m) in the same quarter a year ago.

Revenue was down for the network security company, which is already plagued by questionable accounting practices and federal investigation. It reported revenue of $215.2m (£137m) for the quarter, after pulling in $220.7m (£140m) in Q1 2002.

Disappointing as those numbers may be, the extent of Network Associates' financial troubles is not yet understood.

In March, the company said it would restate financial results for fiscal years 1998, 1999 and 2000, citing information uncovered in a federal investigation of its accounting practices. Results from those years will be modified to reflect revenue on sales to distributors recorded on a sell-through basis.

Under sell-through methodology, sales into distribution channels should not be counted as revenue until the products have been sold by the distributors to their customers.

Network Associates, which sells the popular McAfee antivirus software, also said in March that it would delay filing its detailed annual report with the US Securities and Exchange Commission so it can restate the results for prior years.

Despite its financial troubles, Network Associates made two large investments in intrusion detection and prevention (IDP) technology in recent weeks.

On 1 April, the company announced it was buying IntruVert Networks, a maker of hardware-based firewalls and intrusion detection systems, for $100m (£64m). Days later, Network Associates said it would purchase host-based IDP maker Entercept Security Technologies for $120m (£76m) cash.


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