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Earnings Calls: 
McAfee First Quarter Earnings Call
Author: Maclintosh Kuhlengisa
123jump.com
Last Update: 1:56 PM EDT April 29 2008


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The computer security solutions firm realised revenue of $370 million, up 17% from $315 million in the prior year with balanced performance across segments and geographies. However, increased marketing costs to drive sales adversely affected income, reducing it by 27% to $31.6 million or 19 cents a share. Revenue growth reflects the strength of the security risk management strategy and improved sales execution.


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And then on the DLP SafeBoot, one of the things we actually did to ourselves was created a ToPS for data suite. The ToPS for data suite was a combination of some existing McAfee product and some new products.

Sterling Auty (JP Morgan): What source is the largest contributor to the consumer business?

David DeWalt: There is a number of vectors here for our consumer growth which have been very strong . The number one is our Mcafee.com. This is our online business where we are very good at our software as a service model. That continues to be a very strong grower for us.

It is a feeder from all the other channels, the PC OEM gets the convert into the .com model, our retail model converts into that model, and other kind of components all feed into kind of a classic consumer model. We have won some new partnerships, such as the 97 new and enhanced partnerships we had in the consumer model.

We have got a lot of new partnerships that are being announced and have been announced and just strong momentum target partner team that run our consumer business have done a phenomenal job, helping us invigorate our consumer model here.

Sterling Auty (JP Morgan): How long do you think it will take to get VSOE on the SafeBoot business?

Keith Krzeminski: From a VSOE perspective, we anticipate that it will take somewhere around the year mark to establish VSOE, although there is no bright line test here. We just need to get enough data behind us to show that we have a specific fair value related to the way we sell. We had to convert SafeBoot into our pricing, the McAfee way of pricing.

Brent Thill (Citi): Regarding the distribution footprint, can you just walk through this year where you have seen the biggest overall improvement that you can make in the efficiency in your footprint as you are going to market?

David DeWalt: We have seen the distribution of our products come through a number of mechanisms, some of which were not actually even at McAfee in the last year. We see a tremendous amount of leverage by enabling our channel partners that is critical for us and our success and our operating model.

We also have moved and changed a bit of the model to teleselling and going after blended shore and telesales as a model of operations, particularly mid-market and into the enterprise segment, a lot of leverage opportunity for us over time there and it is high touch model but it is over the phone and high touch as well as in the field and that is a nice place for us to drive a footprint in efficiencies in the model there.
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