Management woes hurt McAfee image

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By  Published  October 20, 2006

It’s a bit like buses: you seem to wait forever for a management scandal then several come along at once.

While HP is still waiting to see just what will be the full effects of the ongoing ‘pretexting’ saga — which has led to the resignation of its chairman Patricia Dunn — another of the IT industry’s biggest names has now parted company with senior members of its management team.

In McAfee’s case, it could hardly be more serious: its CEO and chairman George Samenuk has resigned and it has summarily fired its president Kevin Weiss, over an investigation into its stock options practices.

While this issue has been going on for some time, and also involves a number of other US companies, it had previously seemed to be of more interest to shareholders of the companies concerned than to their customers.

The investigations have looked at the issue of whether companies ‘backdated’ their options — a practice in which options are priced at the lowest trading range for the stock during the month they were approved, rather than the date they were rewarded.

This is not in itself illegal but there are potential legal issues around the information that the companies in question disclosed about the practice.

McAfee is just one of many companies that are being investigated for this practice and, while there have been high-level departures at other firms, most seem to have ridden any storm.

By parting with its most senior management members so abruptly, McAfee could well find it harder to avoid fall-out.

Already, analysts are suggesting that this move could leave the firm vulnerable to acquisition: Cisco has been mentioned as a likely suitor.

As evidence, analysts have pointed to the acquisition of Mercury Interactive (admittedly a less high-profile name than McAfee) by HP following its own options scandal and management shuffle.

Cisco itself has this month declared that it wants to do something about its image: it has decided that it needs to be better-known by the general public.

Despite making most of the kit that the internet runs on, Cisco considers itself to have a lower profile than its technology peers; the Apples and Intels of the tech world.

This despite the fact that its profile amongst the people who actually buy its kit is already pretty high: while the general public may not know Cisco, a US survey of IT decision-makers suggested it was second only to Microsoft for brand recognition.

McAfee ranked tenth in that same survey and while it may well find that its brand recognition goes up in the next few months, it will surely be hoping that it is not for all the wrong reasons — it needs to find some stability and fast.

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