Symantec Rises as Forecast Tops Estimates on Demand
Symantec Corp. (SYMC), the world’s biggest security-software maker, rose the most in three months after forecasting sales that topped analysts’ estimates as large businesses bought more antivirus and encryption tools.
Revenue will rise to $1.72 billion to $1.75 billion in the quarter ending December, the company said in a statement yesterday. That compares with analysts’ prediction of $1.72 billion, according to data compiled by Bloomberg. Profit excluding some items will be 36 cents to 38 cents a share, compared with analysts’ predictions for 42 cents.
Steve Bennett, the former chief executive officer of Intuit Inc. (INTU) who began running Symantec three months ago, is tasked with turning around the company, best-known for its antivirus programs. While sales growth has slowed and profit has shrunk, Symantec is doing a better job now at signing up customers at a time of sluggish spending by corporations and weak personal- computer sales, said Daniel Ives, an analyst at FBR Capital Markets & Co. in New York.
“These are very respectable results in a tough environment,” Ives said in an interview yesterday. “The CEO is off to a good start, he has a lot of goodwill from investors. The key is to deliver consistent results.”
Symantec, based in Mountain View, California, climbed 6.7 percent to $18.54, the biggest gain since July 25. The stock has risen 41 percent since Bennett’s appointment, signaling investor expectations that he’ll engineer a breakup of less-profitable businesses or return cash to shareholders, said Steve Ashley, an analyst with Robert W. Baird & Co.
Bennett said on a conference call yesterday that he’ll outline a strategy for Symantec in January.
“We can’t grow if we don’t do a better job supporting our existing customers with existing products,” Bennett said, adding that the company will also invest more in new products. “That’s what the big investment is and it’s the right thing for our company to do.”
“We spend too much money on our legacy business and not enough money on new things,” he said.
For the second fiscal quarter, which ended Sept. 28, Symantec earned 45 cents a share, excluding stock-based compensation, amortization, restructuring and other charges, versus analysts’ average prediction for 38 cents a share.
Revenue rose 1 percent to $1.7 billion, compared with the projection for $1.66 billion, according to data compiled by Bloomberg. Net income rose 6 percent to $193 million, or 27 cents a share, beating the 20-cent average analyst estimate.
“The stock is not trading on the current configuration of the business,” said Ashley. “It’s trading on the anticipation of some change -- that change is coming and that change will be beneficial.”
Sales of security products to large organizations rose 6.2 percent to $512 million, while consumer security revenue fell less than 1 percent and storage revenue fell 2 percent.
Bill Robbins, executive vice president in charge of Symantec’s worldwide sales and services, left the job as of yesterday after his position was eliminated, the company said in a regulatory filing.
The security software maker has struggled to compete against smaller firms that focus on specific niches, such as stopping espionage and other sophisticated crimes against businesses. That’s cut into the growth of industry leaders including Symantec and McAfee, which is now part of Intel Corp. (INTC)
Symantec has also had a hard time expanding in the data- storage market. The difficulties have led to calls for it to sell or spin off its storage business, which is largely comprised of Veritas Software Corp., bought for $10.2 billion in 2005.
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