McAfee IPO Means 'Getting Itself Back on Track'

A McAfee IPO could raise up to $2 billion and once again bring the company public.

McAfee, which Intel owns part of, has filed plans to go public with the Securities and Exchange Commission. It hasn’t disclosed the number of shares it will offer or the price range for the stock at its debut.

McAfee has applied to list its Class A common stock on Nasdaq under the ticker symbol “MCFE.”

Last summer, McAfee reportedly planned to once again become a public company, after the success of CrowdStrike and other cybersecurity IPOs. It would raise at least $1 billion and value the company around $8 billion. But those plans never materialized.

Renaissance Capital estimates the just-filed IPO could raise up to $2 billion. McAfee booked $2.7 billion in sales for the 12 months ending in June.

McAfee isn’t commenting on the proposed transaction.

Investors ‘Thirsting’ For More IPOs

Eric Parizo is senior analyst with Omdia. He said the U.S. stock market has been up and down this year; however, equity investors are “thirsting” for more IPOs.

Omdia’s Eric Parizo

“And we’ve certainly seen that enthusiasm in successful tech IPOs of late, including Snowflake and JFrog, and security-specific IPOs from last year such as CrowdStrike and Cloudflare,” he said. “There’s no question the McAfee IPO is intended to take advantage of the same favorable market conditions.”

The move is also a sign that McAfee is getting itself back on track, Parizo said.

“After languishing within Intel for years, McAfee was spun out as an independent company again in 2017, and was steadily making much-needed gains in revamping its dated product portfolio under CEO Christopher Young,” he said. “However, the decision to replace Young back in January with veteran technology industry executive Peter Leav was a signal that McAfee’s investors … had run out of patience with the vendor’s multiyear transformation effort.”

Young “ultimately paid the price” for uneven results following his 2018 acquisition of cloud access security broker (CASB) Skyhigh Networks, Parizo said. The purchase was critical to the creation of the MVision line that has revitalized McAfee’s product portfolio. However, the ROI was believed to be far below investors’ expectations.

“It is understood that McAfee has struggled to sell Skyhigh’s technology into its existing customer base, in part because many customers already had purchased CASB technology from competing vendors, while others buyers have shifted their focus to alternative approaches based on concepts like zero trust access,” he said.

McAfee Turning Around

Leav specializes in resuscitating struggling companies and ultimately preparing them for a sale or IPO, Parizo said. Leav has likely made further progress in lowering McAfee’s operating costs, particularly in regard to customer acquisition costs.

“McAfee still has work to do to prove it has overcome its past struggles, and that its products meet the demands of enterprise buyers that now require cybersecurity solutions to support distributed, cloud-centric organizations,” he said.

Ovum’s Rik Turner

Rik Turner, principal analyst at Omdia, said there’s pros and cons to going public.

“A major pro is, of course, the ability to raise money by issuing shares rather than having to take venture capital funding and have some venture capitalist sitting on your board,” he said. “A major con is having Wall Street on your back every quarter, particularly when you are engaged in some projects of a longer maturation; for example, ones that will take longer to come to fruition. Indeed, Wall Street may even force you toward more short-termism.”