Symantec Forecast Misses Estimates as Consumer Demand Dips
Symantec Corp. (SYMC), the biggest maker of computer security software, forecast lower sales and profit than analysts predicted, evidence that a slump in personal computer buying is crimping demand for programs to repel malware attacks.
Profit excluding certain items will be 41 cents to 42 cents a share in the fiscal fourth quarter, Mountain View, California- based Symantec said today in a statement. Sales in the current period will rise to $1.72 billion to $1.73 billion. That fell short of 43 cents in profit and sales of $1.75 billion, the average estimates in a Bloomberg survey of analysts. The company also approved $1 billion in share repurchases.
Results were hurt as sluggish personal-computer buying throttled growth in Symantec’s consumer division, while Europe’s economic malaise prompted companies to rein in information technology budgets.
“They continue to have headwinds in the consumer, but I think they’re doing well relative to what’s happening out there,” said Daniel Ives, an analyst at FBR Capital Markets & Co. in New York. “They’re a clear leader in the space, they have strong brand recognition, and obviously PC weakness does affect them, but they don’t have as high highs or as low lows as the PC industry.”
Net income in the December quarter almost doubled to $240 million, or 32 cents a share, from $132 million, or 17 cents, a year earlier. Sales rose 6.9 percent to $1.72 billion.
PC industry woes clipped the sale of antivirus software to consumers. Revenue in the consumer division rose 5 percent, a slowdown from 11 percent in each of the two previous quarters.
Symantec Chief Executive Enrique Salem said on a conference call that he doesn’t expect a turnaround in PC shipments until Microsoft Corp. introduces its new Windows 8 operating system. That may happen this year.
Shares were little changed after the results were released. Symantec had risen 1.2 percent to $17.07 at the close in New York. The stock has declined 4.2 percent in the past 12 months.
Hackers are becoming more daring, moving from the digital to the physical world in an attack on Iran’s nuclear program in 2010. Government agencies and companies also are being plundered by espionage attacks using so-called “spear phishing” e-mails, which elicit information that can be used against a target.
The proliferation of sophisticated hacking attacks fuels the need for defenses, Salem said in an interview.
“It’s pretty clear there continues to be a lot of demand for our products,” he said. The company had “strong” bookings across Europe, he said later on a conference call.
Symantec isn’t always a passive observer. The company said this month that hackers stole source code to some of its own products. Because the software was years old, security experts said the source code was likely of limited use. Still, it showed that even security stalwarts aren’t immune to malfeasance.
Worldwide spending on security software will rise 10 percent this year to $20.7 billion, according to Gartner Inc. Meanwhile, spending by large organizations on software overall is expected to rise 6 percent to $284.9 billion, Gartner said.
That’s good news for Symantec, which makes most of its money selling to businesses and governments. Symantec commands about a fifth of the worldwide market for security software, according to Gartner. Symantec is followed by McAfee, which was acquired by Intel Corp. (INTC) last year for $6.6 billion.
Symantec also makes storage software, a significant part of its business and a market in which Symantec squares off against the likes of Hewlett-Packard Co. (HPQ), International Business Machines Corp. and Microsoft Corp.
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