McAfee (A)

By Jeff Chambers, Alex Tauber
1998 | Case No. E48A
This case tells the story of McAfee Associates, which was the leader in anti-virus software. The case gives extensive background on John McAfee, the founder, as well as the anti-virus software industry as it emerged in the late 1980’s and early 1990’s. John McAfee realized the potential opportunity in protecting computers from viruses and created a small software package that would help solve the problem. He distributed the product primarily by shareware, giving the product out for free to individuals. However, corporate customers were required to pay for the software. With this, McAfee Associates grew to be a $5 million revenue business with 90% operating margin, and had strong prospects for continued rapid growth. John was approached by the CEO of Symantec, which wanted to purchase McAfee, with an attractive acquisition offer. At about the same time, he was approached by two VC firms, which wanted to invest $10 million for 50% of the business. Now, he had to decide which of the financial offers, if any, to take. Teaching Note available.
This material is available for download by current Stanford GSB students, faculty, and staff, as well as Stanford University alumni. For inquires, contact the Case Writing Office. Download