Symantec Forecasts Miss Estimates on Currencies, `Cautiousness'
Symantec Corp., the world’s largest maker of computer security software, fell the most in a year after issuing sales and profit forecasts that missed analysts’ estimates, evidence that customers delayed closing deals.
Second-quarter profit excluding some costs will be 27 cents to 28 cents a share, compared with 35 cents, the average estimate of analysts surveyed by Bloomberg. Sales will be $1.45 billion to $1.47 billion, missing the $1.52 billion predicted by analysts. Symantec reported results in a statement yesterday.
Some customers are keeping a lid on technology spending and putting off orders as the economy takes longer than expected to rebound from the recession. Overseas receipts are also being trimmed by weakness in foreign currencies. Symantec’s results contrast with those of Intel Corp. and Microsoft Corp., which this month indicated rising demand for computers and software.
“Everyone thought the security space was going to be a little more resilient,” said Brent Thill, an analyst at UBS AG in San Francisco, who rates Symantec “neutral.” “There are a handful of big priorities, and vendors in those categories are doing well, and anyone outside those categories is having some problems.”
In the fiscal first quarter, net income more than doubled to $161 million, or 20 cents a share, from $74 million, or 9 cents, a year earlier, Mountain View, California-based Symantec said. Excluding some costs, profit was 35 cents, meeting the average of analysts’ estimates. Sales were little changed at $1.43 billion, missing the $1.47 billion predicted by analysts.
Symantec slid $1.64, or 11 percent, to $13.03 at 4 p.m. New York time in Nasdaq Stock Market trading, the biggest drop since July 2009. The shares have declined 27 percent this year.
Companies are waiting one to two quarters to buy Symantec’s storage management and security software after purchasing new PCs and servers, Symantec Chief Executive Officer Enrique Salem said in an interview yesterday.
“It’s a progression -- we see that in every recession,” Salem said. “If the strength continues at Intel, that will bode well” for other technology companies, he said.
Several large deals didn’t close in the first quarter, which ended July 2, Salem said during a conference call. Some of the delayed contracts have since been clinched, he said.
Salem, in his second year at the helm, is using acquisitions to expand beyond antivirus and data center programs into such areas as website management and guarding stored data.
Last quarter, Symantec agreed to buy VeriSign Inc.’s website authentication-services unit for $1.28 billion and said it paid $370 million for closely held encryption companies PGP Corp. and GuardianEdge Technologies Inc.
Symantec beat out McAfee Inc. to win an agreement with Hewlett-Packard Co. to distribute Norton Internet Security software on HP’s consumer desktop, laptop, and netbook computers. The arrangement was announced in June.