Symantec Forecasts Profit in Line With Reduced Estimates
Symantec Corp. (SYMC), the world’s biggest seller of security software, gave a forecast for fiscal first- quarter sales and profit that was in line with analysts’ reduced estimates amid weak spending on its data-storage products.
Profit excluding some costs in the period ending in June will be 37 cents to 38 cents a share on sales of $1.65 billion to $1.66 billion, the company said in a statement today. Symantec issued a preliminary forecast on April 24, when it also said fourth-quarter results had missed earlier projections.
Symantec, best-known for its anti-virus programs, has been struggling to expand in the storage market, which is led by larger rivals such as International Business Machines Corp. and EMC Corp. The company’s push into data storage through the $10.2 billion acquisition of Veritas Software Corp. in 2005 is increasingly being viewed as a mistake, said Daniel Ives, an analyst at FBR Capital Markets & Co. in New York.
“It continues to be a core frustration among investors,” Ives said in an interview. “Their core DNA is on the security side. It’s like a pizza shop that starts to make hamburgers.”
Mountain View, California-based Symantec said last week that first-quarter profit excluding certain items would decline 5 percent to 7.5 percent from the 40 cents a share reported a year earlier, while revenue would rise or fall about 0.5 percent from $1.65 billion.
As a result, analysts trimmed first-quarter estimates to an average of 38 cents a share in profit on sales of $1.66 billion, according to data compiled by Bloomberg.
Chief Executive Officer Enrique Salem said Symantec’s data- storage business has been hurt as Sun Microsystems servers, now made by Oracle Corp., have lost market share, which Oracle has said is part of a strategy to focus on more profitable deals. Symantec’s data-storage software has traditionally been sold alongside Sun servers, Salem said.
“We didn’t close as many large site licenses this year,” Salem said in an interview today.
In the fourth quarter, which ended March 30, sales rose less than 1 percent to $1.68 billion, the company said today. Net income, which included a gain from the sale of a joint venture, more than tripled to $559 million, or 76 cents a share, from $168 million, or 22 cents, a year earlier. Profit excluding certain items was 38 cents.
Fourth-quarter sales in the storage and server management division fell 5.6 percent to $591 million, while consumer sales rose 1.8 percent to $523 million, Symantec said in the statement.
In its preliminary report, Symantec said it expected to report fiscal fourth-quarter revenue of about $1.68 billion, compared with a prior projection of $1.72 billion to $1.73 billion.
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