Network Associates Warns of Loss

Wednesday, December 27th 2000, 12:00 am

By: News On 6

SANTA CLARA, Calif. (AP) â€” Shares of Network Associates Inc. plummeted 66 percent Wednesday after the software maker warned it expects to report a loss for the fourth quarter and for the year and said three top executives have resigned.

Network Associates estimates said late Tuesday it will lose $130 million to $140 million in the quarter ended Dec. 31. Revenues for the period are expected to be between $55 million to $65 million, the company said.

The company, which makes antivirus and security software, also expects a loss for the year ranging between $84 million and $94 million, and annual revenue of $742 million to $752 million.

Wall Street was expecting profits of 31 cents a share for the fourth quarter and $1.02 for the year, based on a poll of analysts by First Call/Thomson Financial.

Network Associates blamed a decision by key distributors to ``dramatically'' reduce their inventory and a reduction in demand induced by a slowing economy.

``The company further believes that the lower fourth quarter demand is not related to the general competitiveness of its products but is due to concerns about the state of the economy from the customer base,'' Network Associates said in a statement.

The company also said president Peter Watkins is leaving the company Dec. 31, and chairman and CEO William Larson and chief financial officer Prabhat Goyal will also step down.

Edwin Harper, a company director, has become chairman of the board, and the board has launched a search for a new CEO and president. The search is expected to be completed within 60 days.

Goyal will remain in the position until a new CFO is appointed.

The company expects to report actual results Jan. 25. At that time, the company said it will give guidance on 2001 results.

Network Associates shares were off $7.75 at $4 a share in morning trading Wednesday on the Nasdaq Stock Market.