11 October 2002 Security software specialist Network Associates (NAI) has reported a 13% rise in revenues for its latest quarter, helped by the re-integration of its anti-virus software subsidiary McAfee.com.

McAfee.com was set-up to sell anti-virus and other security software products directly over the Internet. It was spun-out of NAI in 1999 at a time when the company was struggling following an ill-conceived acquisition binge.

In the third quarter to the end of September, NAI posted revenues of $232.2 million (€235.4m) – including sales of McAfee.com – a 13% rise on the same period a year earlier. Excluding revenues from McAfee.com, the company reported sales of $211.2 million (€214.1m), compared to $205.6 million (€208.4m) in the third-quarter of 2001 (Q3 2001) – a less impressive rise of 2%.

NAI was boosted by a five-year deal – the largest in the company’s history – completed with the US Department of Defense’s Information Systems Agency. An extension of an existing contract with NAI, the agency will roll out McAfee Security anti-virus software to more than 3 million users.

The company also swung back into profit, turning in a net income of $9.1 million (€9.2m), after a net loss of $11.3 million (€11.5m) a year earlier. The latest results included a $13.6 million (€13.8m) charge from acquisition-related costs and $11.2 million (€11.4m) in stock-based compensation related to the McAfee.com re-purchase.

After NAI announced its results, the company’s stock rose by a quarter in late afternoon trading on the New York Stock Exchange.

However, the re-acquisition of McAfee represents something of a U-turn for Network Associates. Originally, NAI spun off McAfee.com as a publicly listed company by selling a quarter of the company’s stock in 1999.

In August 2002, NAI re-acquired these shares in an effort to streamline its product offerings and minimise confusion among customers. McAfee.com is now part of NAI’s consumer group, which includes McAfee retail products and McAfee.com online services.