McAfee Inc. (MFE) is one of the leading players in the information technology security industry.
The company delivered decent second-quarter results, although revenue was below our expectation. The strong product portfolio, acquisitions, customer win momentum and decent cash generation ability are positives.
On the other hand, we are a bit concerned about the intense competition that the company faces from small and large players, in the networking, consumer and OEM business, as well as from the hardware and software manufacturers entering the IT security business. This and the enhanced level of security offered by Windows 7 also pose some challenges to McAfee. We downgrade our rating on McAfee to Underperform.