Zacks_Analysts' Blog : McAfee Joins Up with D-Link - Analyst Blog

Information Technology (IT) security solutions provider McAfee Inc. (MFE) has joined with end-to-end networking solutions provider D-Link. As per this recent agreement, D-Link will capitalize on the McAfee Global Threat Intelligence Web reputation and use it in conjunction with the company’s Wishfi application to provide web-based advertising services to ISPs in North America.



The integration of its cloud-based Global Threat Intelligence with the D-Link Wishfi web communications will resolve many Internet Service Provider (ISP) issues. This solution provided by D-link’s Wishfi software ensures online visibility of links related to information and promotion, irrespective of a user’s home page.



Moreover, technology integration of the two companies allows Wishfi to target specific advertisements published on a particular website visited by the end user, based on its reputation and content. Wishfi software would therefore be able to target advertisements available on the websites most frequently visited by the end user.



The McAfee-D-Link venture is in keeping with strategic tie ups recently being made by the company. McAfee is trying to counter the challenges imposed by Windows 7, as it offers enhanced security measures. This new product from the Microsoft (MSFT) stable may hamper the business interest of companies such as McAfee because the former has loaded the operating system with its own security software, which could translate to fewer customers purchasing McAfee products. Microsoft's security enhancement should be considered a serious challenge as the software major has a track record of blunting the competitive edge of other companies such as Netscape Communications.



Nevertheless, McAfee has a strong product portfolio and solid growth prospects in all its served markets to its advantage. Moreover, McAfee delivered respectable second-quarter results, with the earnings per share coming in line with the Zacks Consensus Estimate. Increased acquisitions, customer win momentum and good cash generation ability of McAfee are also positives.



On the other hand, we are a bit concerned about intense competition that the company faces from small and large players, in the networking, consumer and OEM businesses, as well from the hardware and software manufacturers entering the IT security business.



We currently have a short-term Hold recommendation on McAfee, as indicated by the Zacks #3 Rank.