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Investors snap up McAfee
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December 2, 1999: 4:33 p.m. ET
Online computer-services outfit shares skyrocket amid Nasdaq rally
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NEW YORK (CNNfn) - McAfee.com Corp., a spinoff from antivirus-software firm Network Associates Inc., soared on its first day of trading, one of several IPOs that were boosted by the bullish climate that overtook the Nasdaq Thursday.
Shares of Santa Clara, Calif.-based McAfee.com (MCAF) were priced Wednesday at 12, the top of lead underwriter Morgan Stanley Dean Witter’s estimated pricing range, and ended the day at 44.
Analysts had predicted a positive debut for McAfee, citing its well-known ability to prevent PC viruses and a surging Nasdaq, which closed up nearly 3 percent at 3452.76.
Through its Web site, McAfee offers services that allow consumers to secure, repair, update and upgrade their PCs online, providing a suite of products and services personalized for consumers based on their PC configurations, software and attached peripherals, such as scanners, printers and modems.
The company generates its revenue from sales of subscriptions to its hosted software applications, such as McAfee Clinic, online sales of non-hosted software, Internet banner advertisements and sponsorships. As of Nov. 24, the company said it had over 135,000 paid subscribers for the McAfee Clinic service.
For the nine months ended Sept. 30, McAfee.com, as a unit of Network Associates (NETA), had revenue of $16.1 million and posted a net loss of $21.8 million, according to documents filed with the Securities and Exchange Commission. In 1998, the company had total sales of $6.3 million and posted a loss of $1.9 million.
There will be roughly 42.2 million shares outstanding after the IPO, and Network Associates will continue to own about 85 percent of the company.
"We’re in a hot market,” said analyst Jeff Hirschkorn at IPO.com. "Anything tech-related will take off ... and the key to McAfee is its brand name.”
"It's a high-profile deal for a well-known organization,” agreed Irv DeGraw, research director at WorldFinanceNet.com, who said he was wary of the firm's surge in the current market. "The market is saying more than the fundamentals ... near-term, it’s getting the benefit of today’s valuations.”
Other IPO’s of note in Thursdays market included: online wedding-planning service The Knot (KNOT) Inc., which soared more than 100 percent in early trade; Digimarc (DMRC) Corp., which more than tripled; and PFSweb (PFSW) Inc., which climbed roughly 150 percent after being priced $2 above the high-end of its expected range. 
-- from staff and wire reports
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