Bullish on McAfee

McAfee's incoming CEO Dave DeWalt certainly has his hands full when he starts his new job in April.

The company has been mired in financial investigations focused on overstated earnings and stock option grants for months, resulting in $50 million in fines and a revolving door at the executive level. Meanwhile, Microsoft's PC security products (OneCare Live for consumers and Forefront Desktop for businesses) mean more intense competition in McAfee's most lucrative product area, while enterprise bigwigs like Cisco Systems, EMC, IBM, and Symantec circle their wagons around the rest of McAfee's product portfolio.

Given this depressing set of circumstances, can McAfee's new CEO make a difference? Yup. My colleagues and I at Enterprise Strategy Group believe that DeWalt brings the exact skills the company needs. DeWalt can help McAfee develop:

• A new culture. The odds were stacked against Documentum when it was acquired by EMC--DeWalt's former company. At the time it acquired Documentum, EMC was a storage-only company that thought storage management tools could be defined as enterprise software. In spite of an internal culture suspicious of outsiders, DeWalt grew Documentum revenue, resources, and functionality while merging its software DNA into EMC's aggressive sales execution machine. DeWalt can leverage this experience to make McAfee's culture more aggressive while leveraging its existing brand and technology strength.

• An enterprise focus. The security business is moving from tactical point tools to strategic enterprise infrastructure. DeWalt knows the enterprise ropes because he worked at Oracle and because he built Documentum into an enterprise-class content management software solution at a storage-centric company. DeWalt will be able to prepare and point McAfee at the same rich enterprise security pie that is attracting Cisco IBM, and the like.

• A broader portfolio. McAfee has been slow to pull the trigger on acquisitions in the past, yet it needs to speed up the pace and expand its offerings by grabbing a few start-ups in areas like security management that can open enterprise doors. DeWalt has the right resume here as he did a bunch of acquisitions at EMC that helped transition Documentum from a document imaging repository to an enterprise content management platform.

DeWalt inherits a company with a market cap in excess of $4 billion and over $700 million in cash so he has the financial resources needed for a shopping spree. Additionally, the security market is red hot right now and there are plenty of green field opportunities to pursue.

Given all of these conditions, DeWalt may be just what the doctor ordered to help transition desktop security veteran McAfee into an enterprise-focused strategic company.