Investors mis-interpret McAfee/MS .NET deal

A mass delusion about the significance of a press release swept through Wall Street Tuesday, driving shares of anti-virus outfit McAfee up more than fifty-four percent on news that the company would integrate Microsoft .NET technologies into its ASP (Application Service Provider) services.

The 'strategic partnership' announced means simply that McAfee customers will be able to use their MS Passports for authentication, and that the company will avail itself of future .NET bells and whistles such as Hailstorm as Redmond rolls them out.

Nevertheless, euphoric investors pumped McAfee shares up $4.40 to $12.50, as if they imagined the deal to have awarded the company a contract to provide anti-virus services for the .NET initiative.

A story by Reuters, carried by Yahoo News, carelessly absorbed this misunderstanding, and serves to illustrate it nicely.

"McAfee said it signed a deal with Microsoft to integrate McAfee software -- including antivirus, privacy, and firewall products -- with Microsoft's .Net Internet servers," the mysterious Reuters wire-drone says superstitiously.

"In addition, the two companies will also work to integrate McAfee's software with Microsoft's 'Passport' and 'Hailstorm' Web-based software services," s/he dribbles on.

The implication there is that McAfee software or services are somehow going to be essential to the .NET scheme, but nothing could be farther from the truth.

According to our sources, MS isn't even using McAfee software on its own servers; and certainly it hasn't chosen them as the security provider for .NET.

But Hotmail users can get a free McAfee scan of any suspicious, attached files, so investors likely had the Hotmail service in mind as an example of what the new deal would imply for Passport and .NET.

In fact, there's nothing in Tuesday's announcement that expands Microsoft's use or integration of McAfee products, so the sudden stock boost really is a freebie.

"If I was a McAfee exec, I'd be cashing out my options today," our source quipped.

And perhaps, after a good night's sleep, Tuesday's investment enthusiasts will follow suit. ®