To me, John McAfee is one of the most important technologists of the 20th century. Not only was he one of the first to develop antivirus software, he was a smart businessman. He distributed his software for free and it spread like, well, a virus, quickly becoming the standard for the industry. And on top of that, there's built-in demand. As long as there are angst-ridden 15-year-olds out there creating the next big virus/worm, individuals and businesses will need the latest antivirus protection.
The genesis of his efforts was his company, McAfee (NYSE:MFE), and it appears the antivirus business is still solidly positioned. For the second quarter, net income surged to $41.7 million or $0.25 per share, which was up from $10.2 million, or $0.06 per share in the same period a year ago. During this period, revenues increased 8.7% to $245.4 million. Keep in mind that during the past year, McAfee sold three businesses, which reduced revenue growth. Factoring out these transactions, the company's sales actually increased 32%.
The restructuring of its business (through the aforementioned sale) and improved cost controls are having an immediate, positive impact for McAfee. In addition, the company is showing traction with distribution deals, such as with AOL. In fact, McAfee is building a large consumer online-services business, with 13.1 million subscribers. In the second quarter, the company added 2.1 million subscribers.
Expect the growth to continue. McAfee estimates third-quarter revenues at $225 million to $245 million, with earnings of $0.28 per share. McAfee is putting lots of resources into providing customers with better solutions. For example, a couple months ago McAfee purchased a private company, Wireless Security, which develops security products for Wi-Fi networks.
While competitor Symantec (NASDAQ:SYMC) has been diversifying -- such as with its mega-merger with Veritas -- McAfee is focusing on security, especially in the consumer and small-business markets. It's a growth story that Wall Street can understand, and it has resulted in a strong stock price that should continue.
Fool contributor Tom Taulli does not own shares mentioned in this article.
