Despite the drama, McAfee's business is still growing nicely. In the third quarter, revenues increased 14% to $288 million. During this period, net income increased from $23 million or $0.13 per share to $30 million or $0.19 per share.
Basically, McAfee has a comprehensive suite of security products, with customers ranging from individual consumers to large enterprises to governments. Its consumer business grew 20% to $106 million in the past quarter. A big part of that business comes in the form of Web-based subscriptions (such as for antivirus software). In the quarter, the company added 1.7 million net new subscribers; the total count is now 22.5 million. And it doesn't hurt that McAfee has formed key distribution agreements with companies like Dell
Another part of the consumer business with lots of potential is SiteAdvisor, which essentially rates sites that come up on search engines. In light of the many problems with spyware and malware, this should be a great product offering.
On the enterprise front, revenues grew by 14% to $168 million in the third quarter. For the most part, McAfee is getting traction with products it has picked up through acquisitions, such as Foundstone.
No doubt, with the changes in senior management, McAfee is effectively dealing with Wall Street's concerns about the implications of the stock-options backdating scandal. In a sense, this takes away uncertainty for investors.
However, senior management change is still disruptive. In the meantime, current management will need to deal with the complexities of integrating a variety of recent acquisitions, such as Onigma, Preventsys, and Citadel Security Software.
And there is still the unquantifiable risk of Microsoft, which plans to push hard into the security space. True, McAfee has a great franchise in security -- but even modest success from Microsoft (like the loss of some distribution deals) could crimp growth over the next year.
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Dell and Microsoft are both Inside Value picks. Best Buy and Dell are both Stock Advisor recommendations.
Fool contributor Tom Taulli does not own shares of companies mentioned in this article. He is currently ranked 9 out of 11,654 in CAPS.