jumps 267 percent in first trading day

Though revenue growth for McAfee looks good, ownership by Network Associates involves risks for investors closed up 32, or 267 percent, to 44 in its IPO Thursday, after it priced shares at $12 (£7), well above the initial range of $6 to $8 a share.

Its shares moved as high as 48 5/16 in early trading.

The company, which delivers PC management applications such as virus scan and Y2K checks online, is a wholly-owned subsidiary of Network Associates.

Morgan Stanley is the lead underwriter for the offering of 6.3 million shares. Co-managers include Robertson Stephens and Hambrecht & Quist.

McAfee had a net loss $21.8m on revenue of $16.1m for the nine months ended September 30. In the same period of 1998, the company lost just $823,000 on revenue of $4.3m. According to McAfee's regulatory filings, most of its revenue is concentrated in reseller During the nine months ended September 30, about 40 percent of its revenue was derived from the sale of our software licenses through

Though revenue growth for McAfee looks good, the company's ownership by Network Associates involves risks for investors, according to the company filings. McAfee does not own much of the core technology and intellectual property underlying its products, and is therefore not free to develop them. Network Associates competes with McAfee by selling "shrink wrapped," boxed versions of McAfee VirusScan and McAfee Office.

McAfee's IPO has become controversial for the windfall it will deliver to Network Associates's CEO William Larson. The company has been suffering since last spring, when it missed estimates after shipping more products to distributors than they really needed. Shareholder lawsuits have been filed over the practice, known as "stuffing the channel."

The IPO will boost the net worth of Larson by about $7m during this low point for Network Associates. The move has angered some shareholders, the Wall Street Journal reported Wednesday.

Network Associates won't discuss the option grant, saying it is in a "quiet period" ahead of the IPO. After the IPO, Network Associates will own 85 percent of the stock in, but will have 95 percent of the voting rights.

McAfee also warned in its SEC filings that its business may also be harmed by the litigation to which Network Associates is currently party to; Symantec, Hilgraeve and Trend Micro have each filed suit against Network Associates with respect to the anti-virus technology which McAfee licenses from Network Associates.

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