McAfee Inc. Q3 2009 Earnings Call Transcript

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2009-10-29 17:22:07.0

Tags: McAfee Inc., Dell Computer Corp., Payment, Cash Flow, Call Transcript, Earnings, Operational Accounting, Personal Finance, Finance, Seeking Alpha, MainFrame Entertainment Inc.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Michael Turits - Raymond James.

Michael Turits - Raymond James

On the upfront payments to PC OEMs, including Dell, about what do you expect that to be this year. In 2008 it was at $55.0 million. Any idea what that will be in total for this year, including Dell?

David G. DeWalt

What we really talked to this quarter was that we signed a new agreement with Dell. This obviously offers us a two-year exclusive recommended and default positioning with Dell across their consumer product lines. We mentioned that there was a payment already in our cash flow results for Q3. There is a similar size payment in the fourth quarter, but even with that, we see record cash flow results for the year.

So just trying to show you that the Dell deal is sort of done; it's really set up for a couple of years. We can absorb this from a cash flow and profitability point of view very nicely. It sets us up for a couple of years now with one of the largest PC makers. We haven't disclosed anything more than that in terms of payments, but this was a really nice transaction for us to get, one of the pillars.

I think quite honestly, in addition to that, having Verizon, AT&T, and Adobe as well as one of the largest banks in the world, Bank of America, really pushing our technologies now as we move forward, we think we've got a really nice balance to the PC OEM model, as well as other distribution models.

So we are thinking this was a very strategic quarter for the company and as it relates to PC OEMs and distribution, I couldn't be more pleased.

Operator

Your next question comes from Daniel Ives – FBR.

Daniel Ives - FBR

Could you just talk about cash flow expectations for Q4?

Albert A. Pimentel

You know, we don't give guidance on cash flow. I think I made guidance in my comments. We look at the annual, historical trends, the cash flow. I think we'll just stand by that range of non-GAAP incomes and non-GAAP net income as a reasonable reference point, but we are not going to make a comment about fourth quarter cash flow.

Certainly, we have demonstrated in the third quarter, I think we've got a better handle on managing our cash flow and as we said, it's a very important metric that we want to make sure we deliver on just like we do with revenues, earnings per share, and operating margin management. So, I'll leave it at that but I think we are pretty encouraged that we have a good process now to go forward with.

 

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