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Secure Computing slashes product line

New president John McNulty drives a strategic makeover for the security software company, including cutting its offerings in half.

Secure Computing, which sells security software and tokens, is slashing up to half its product line after missing Wall Street expectations by a long shot for the first three months of 1999.

John McNulty, who joined the security firm May 3 as president, is driving the strategic makeover as the company cuts up to half of its offerings. Despite the changes, McNulty said no layoffs are anticipated. He also said the product changes won't hurt revenues.

"Instead of trying to be in the entire segment of security, we want to put ourselves into a position to be a clear leader where we believe we have real strength," said McNulty, a former Intel and Genesys Telecommunications Lab executive, who later this year also will assume the chief executive title from chairman Jeff Waxman.

The moves, outlined this week by management, mean Secure is scaling back its role as an end-to-end security vendor that corporate buyers can turn to for all their security needs. Two other security firms pursuing that one-stop approach, Network Associates and Axent, have also been hammered in the stock market after missing first quarter expectations.

In April, Secure announced that first-quarter revenues had fallen from $12.8 million in 1998 to $8.2 million in the first three months of this year. The company blamed major deals that didn't close during the quarter, but it is sounding cautions about prospects for the remainder of 1999 too.

Providing few details of Secure's new strategy, McNulty indicated the firm will focus on high-end firewalls and security authentication, including both software and tokens to vouch for the identity of a user. The company will also continue backing its core remote access software to give outsiders access to particular parts of a corporate intranet, and filtering software to block access to objectionable Web sites.

Secure's stock, which traded at 29 a share in January, was trading near mid-day at 3.8125, up 0.1875.

Chief financial officer Tim McGurran said the company, which books most of its revenue in the final weeks of a fiscal quarter, is comfortable with Wall Street's expectations for the current quarter, calling first-quarter results an "aberration."

McNulty is Secure's second turnaround executive. Waxman joined in early 1997 after a Secure acquisition spree and nursed the company back to profitability, until last quarter's disappointment.

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