Network Associates is selling off its Sniffer network management software and changing its name back to its previous name - McAfee -in an effort to cut costs and boost profitability by concentrating on security products, the company announced yesterday.
Network Associates plans to sell the Sniffer assets for $275 million (£155m) in cash to Silver Lake Partners and Texas Pacific Group. The private equity firms will turn the Sniffer business into a new, standalone company called Network General, which will continue to develop, support and market the products.
The companies expect the sale to close in the third quarter, subject to regulatory approvals, at which time Network Associates will change its name to McAfee. It considers McAfee to be a better known, more powerful brand than Network Associates, said George Samenuk, the company's chairman and chief exec.
Network Associates also announced it expects to report net revenue of $217 million (£122m) for its first fiscal quarter, with net earnings of $0.10 per share pro forma - less than analysts expected.
The goal of the changes is to streamline the company around security products and increase operating margins to 25 percent by the middle of next year, Samenuk said. To achieve that, Network Associates is rearchitecting its backend systems and altering its channel program, he said.
The network management Sniffer products have not been meeting targets for profit and growth, Samenuk said. They are also the company's last non-security products after it sold its Magic line of helpdesk and management products to BMC late last year.
"It's our goal to minimize as much as possible the transition issues faced by our Sniffer customers. Most of the large McAfee customers are also Sniffer customers, so we want the new company to be wildly successful," Samenuk said.
The Sniffer group employed between 450 and 500 people, or 15 percent of Network Associates' workforce, and the majority will become part of Network General, Samenuk said. The change will reduce Network Associates' revenue by about $200 million this year, he said. "The strategic steps we are taking now will create a company that is well positioned to capitalize on the high demand in the security business," he said.
The name change brings Network Associates full circle. Once upon a time it was called McAfee Associates. In 1997, McAfee Associates merged with Network General - the name being given to the new Sniffer business - and the new company became Network Associates.