Symantec Forecasts Revenue That Trails Some EstimatesJordan Robertson
Symantec Corp.’s shares slid the most since October after the company forecast revenue that fell short of some analysts’ estimates, as declines in the personal-computer market and the emergence of advanced hacking threats hurt demand for traditional antivirus software.
The stock dropped as much as 10 percent to $21.67 in New York, the biggest decline since Oct. 24. Sales in the fiscal fourth quarter will be $1.62 billion to $1.66 billion, the Mountain View, California-based company said in a statement yesterday. Analysts had projected sales of $1.64 billion, according to data compiled by Bloomberg.
Chief Executive Officer Steve Bennett, who took over the company in July 2012, cut about 1,000 jobs last year, reorganized the sales division to focus on new business and eliminated old products as a record slump for PCs crimped sales of antivirus products. Bennett is pushing the company into new technologies to fight advanced threats such as international spying and the recent data breaches at Target Corp. and Neiman Marcus Group Ltd.
“The company has major growth challenges on the horizon,” said Daniel Ives, an analyst at FBR Capital Markets in New York who has the equivalent of a hold rating on the stock. “While the company is doing a good job of cutting costs, growth remains elusive.”
In the fiscal third quarter, which ended Dec. 27, net income rose 31 percent to $283 million, or 40 cents a share, from $216 million, or 31 cents, a year earlier, Symantec said. Sales fell 4.8 percent to $1.71 billion, beating the average analyst estimate of $1.65 billion, according to data compiled by Bloomberg.
Symantec’s restructuring is complete and no other major changes are planned, Bennett said in an interview. The company is still recovering from the overhaul of the sales team, which involved assigning employees to new territories and products, temporarily depressing revenue, Bennett said.
“I’m very pleased with the numbers we’re delivering given the kind of transformation we’re undergoing,” he said. “Even though we’re a little short on revenue, we’re poised to deliver faster growth for the future.”
Sales in Asia Pacific and Japan dropped 12 percent from a year earlier to $297 million, and revenue in the information management division dropped 6 percent to $660 million.
Fourth-quarter profit, excluding some items, will be 40 cents a share to 42 cents a share, compared with analysts’ average estimate of 41 cents.
Bennett, who became CEO after Enrique Salem was ousted, is contending with increased competition from upstarts such as FireEye Inc. and Palo Alto Networks Inc., whose technology is designed to deal with more modern attacks.
The market for security software and equipment will increase 9.1 percent this year to $71.7 billion, according to researcher Gartner Inc. Symantec’s revenue is expected to drop 4 percent this fiscal year, according to analysts’ average estimate, after rising 3 percent in 2013.
As antivirus demand wanes, Symantec has been unable to make up for the declines in the data-storage market. Symantec acquired its way into that business with the $10.2 billion purchase of Veritas Software Corp. in 2005. The company is discontinuing a data-backup service called Backup Exec.cloud because of slack demand, Bloomberg News reported in November.
Symantec’s struggles have led to a management overhaul. Last month the company said it was replacing Steve Trilling as chief technology officer with Microsoft Corp. veteran Amit Mital. In November, the company announced the departure of Francis deSouza, president of products and services, two months after Chief Financial Officer James Beer left for the same job at McKesson Corp.