March 26, 2002, 10:08 AM — Security software vendor Network Associates Inc. added its name to the growing list of tech companies under investigation for their accounting practices when it disclosed Tuesday that it is under investigation by the U.S. Securities and Exchange Commission (SEC).
The Santa Clara, California-based company also announced that it would postpone its bid to purchase all outstanding shares of its subsidiary company McAfee.com Corp. until a later date. On Monday, McAfee.com's board of directors said that Network Associates' offer to the company of 0.675 shares of Network Associates stock for each outstanding share of McAfee.com stock was insufficient.
The SEC inquiry concerns the company's accounting practices in 2000. Network Associates was run by a different management team in 2000 and appointed its current Chief Executive Officer George Samenuk and a number of new management team members in 2001.
Network Associates and its auditor PricewaterhouseCoopers LLP have double-checked the company's financial results for 2000 and "continue to believe the accounting was proper," Samenuk said on a conference call held early Tuesday.
Though he was unable to elaborate on why the SEC chose to investigate the company now or what the exact nature of the investigation is, he did say that he expects the investigation will focus on a statement released by Network Associates on Dec. 26, 2000. In that statement, the company warned that it would post a net loss of between US$130 million and $140 million for the fourth quarter of 2000, and that its top three executives would resign.
Despite the ongoing investigation, "we do not expect this to have any effect on our current business," Samenuk said.
The SEC has been busy with investigations into technology companies in recent months, with ongoing probes involving Computer Associates International Inc., Global Crossing Holdings Ltd., Qwest Communications International Inc., RSA Security Inc. and WorldCom Inc.