McAfee (MFE: sentiment, chart, options) reported earnings late yesterday, and the Street's reaction has been less than positive - the shares are down more than 5% as we head toward the close. For the first quarter, MFE reported net income of $31.6 million, or 19 cents per share, down from $43.4 million, or 27 cents a share in the same period last year. (Three months ago, the company said it expected first-quarter earnings of 24 cents to 29 cents per share on revenue of $345 million to $360 million.) Excluding items, earnings would have come in at 43 cents per share on revenue of $369.6 million. Analysts expected a higher profit of 45 cents per share on sales of $352 million.

Looking ahead, McAfee expects net revenue in the second quarter of $360 million to $375 million. The company expects second-quarter GAAP net income of 26 cents to 31 cents per share and adjusted earnings of 42 cents per share to 47 cents per share.

Dave DeWalt, McAfee's chief executive officer and president, reported, "In the first quarter of 2008, McAfee reported record revenue and our ninth consecutive quarter of double-digit year-over-year revenue growth."

The pros on Wall Street are very optimistic about MFE. Ten brokerage firms are recommending a "strong buy" or "buy" rating, while only 6 firms are suggesting a "hold" rating. Plus, Thomson Financial reports that MFE's average 12-month price target from analysts is $42.17, which would be an 18% increase from its current price. This bullish sentiment is not surprising, considering the stock's long-term uptrend.

However, the stock has been moving sideways since January of this year. As a result, short-term option traders have taken a bearish stance the Schaeffer's put/call open interest ratio (SOIR) for MFE is at 1.19. This means there are more puts than calls among options that expire in the next 3 months. Option investors are expecting a downtrend. Furthermore, this ratio is in the 90th annual percentile, indicating that short-term option speculators have been more bearishly aligned only 10% of the time during the last year.