Running security software specialist Network Associates has proven as vexing as fighting hackers. On Dec. 26, the same day Network Associates warned of a disastrous fourth quarter, Chairman William Larson said he was stepping down. He will also give up his CEO title when a replacement is found. Gone with him are President Peter Watkins and Chief Financial Officer Prabhat Goyal. Board member Edwin Harper will take over as chairman.
Larson blamed major problems with sales distribution channels for the earnings surprise. As a result, he was forced to change accounting methods. Revenues, once expected to hit $250 million, will be about $65 million, while net losses will total $140 million. Even by the company's old accounting, quarterly revenues would have barely topped $200 million.
Wall Street is apoplectic. NA shares fell $8, or nearly 70%, on Dec. 27. Larson said he started looking for a replacement two months ago. Looks like the fourth-quarter gave him the final shove.