While more and more software becomes free, there is one market for which consumers and businesses are willing to shell out money. Yes, it's security software.A mega player in the space, McAfee (NYSE: MFE), reported its latest earnings report Thursday, a day after its main rival Symantec (NASDAQ: SYMC) reported its own quite strong results.
As for McAfee, the company posted a sales increase of 18% to $485.3 million. While this is certainly robust, it was still a bit light compared to the consensus forecast. On the news, the shares of McAfee fell 9% to $39.76.
So, might Symantec be gaining on McAfee?
To remain competitive, McAfee is pushing aggressively to strike distribution deals, which include 22 signed or extended agreements as well as 68 new or enhanced online partnerships. Many of the partners include biggies like Dell (NASDAQ: Dell), Verizon (NYSE: VZ) and AT&T (NYSE: T).
However, these deals aren't cheap and the conversion rates can be soft. Keep in mind that McAfee saw a 25% drop in Q3 profits.
And McAfee's corporate business? No doubt, there are difficulties with getting new customers, but somehow McAfee is still finding growth. In Q3, corporate revenues increased 25% to $308 million. In all, McAfee closed 472 deals over $100,000 and 31 were over $1 million.
McAfee also has bolstered its product offerings through a variety of acquisitions, and with its bulging cash flows -- which came to $152 million in the prior quarter -- there is enough firepower to continue the dealmaking.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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